3 Stock Highlight – September 2021 Edition

By: Jake Sheckter  |  September 20, 2021
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By Jake Sheckter, Business Editor

Each month’s edition of the YU Observer this year will include a “3-Stock Highlight” on a few stocks that have been in the news lately, have interesting stories, or provide for an interesting read. On behalf of the YU Observer, we’d like to remind everyone that these stock picks are for educational purposes only and are not to be taken as financial advice or used for investing any real cash. This month, we will be highlighting Lemonade Inc. (LMND), Upstart Holdings (UPST), and DoorDash Inc. (DASH).

Lemonade Inc. (LMND

“Forget everything you know about insurance”. This is the line that greets visitors on Lemonade’s website. Lemonade Inc., was founded in 2015, and entered the insurance market to completely change the game. With a vision of transforming insurance from a necessary evil into a social good, Lemonade has positioned itself incredibly well in the 21st century not only by way of technology and simplicity, but with a socially-responsible message overall. Lemonade works by revolutionizing the world of insurance with paperless, nearly instant, and easy claims. However, Lemonade’s technological advantage extends beyond their website and convenient platforms; Lemonade sports a “top of their industry” artificial intelligence program named Maya which walks you through the signup, claims, and informative processes. Lemonade speeds up the claim process from days or weeks to mere seconds (literally setting a record) due to Maya’s capabilities. Nearly 30% of all claims can be paid “immediately” after being checked by anti-fraud algorithms, while more difficult claims are handled by a team of real and service-minded people. Lemonade is currently available for most of the United States, Germany and the Netherlands, and continues to expand globally, making its way throughout Europe. 

Lemonade’s real superpower presents itself in the way they treat their customers’ money as their customers’ and not their own. Lemonade customers do still pay a premium per month like anyone else, but the crucial difference is that Lemonade donates all unclaimed premium income to charities that their customers chose at the end of each year. By taking just enough to cover overhead and salaries, their core business is not making profit, it is making a difference for all the stakeholders they serve. As a certified B-Corp, Lemonade aims to prove that being genuine and caring with its customers is the best way to ensure their survival and relevancy in the future. Through their simplistic program, technological and AI capabilities, and socially conscious mindset, Lemonade is and will continue to disrupt the entire insurance industry.

Overall, Lemonade is able to offer a superior product to consumers at a lower price point. As millennials start to rent and own homes, it’s conceivable that many will avoid traditional insurers and instead use a digitally native brand like Lemonade. This is particularly dangerous to existing insurers, as not only are they losing out on the huge millennial market, but they are also losing on the more profitable business segment of home insurance.

Upstart Holdings (UPST

Upstart Holdings has been an under-the-radar Fintech company that has quietly been making moves throughout the pandemic. It’s not typically normal for stocks to increase their share price tenfold, and Upstart did it in less than a year. A personal AI (artificial intelligence)-based lending company, Upstart determines if one is eligible for loans with their Artificial Intelligence system, which surveys people on a variety of topics including education and job rather than merely the traditional FICO (Fair Issac Corporation) scores. The company generates revenue by referring these qualified customers to banks and then charging a reference fee. 

Upstart states that its platform will approve loans at the same rate but with 75% fewer defaults, and that it was five times more predictable than a credit score during the Covid pandemic. Luckily, Upstart appears to be backing up these bold performance claims. The company became public with just nine banking/credit union partners and in less than a year since its S-1 was filed, Upstart has almost tripled its partner base to 25 banks and credit unions. Upstart has already served over 600,000 people and is continuing to penetrate the market of online financial services. Upstart beat its expected earnings reports for the last three quarters in a row, with its Q2 2021 earnings report beating the analysts estimate by $0.37. Analysts also estimated a revenue growth rate of roughly 220% for this year. The radical shift towards online banking and financial transactions, especially throughout the Covid-19 pandemic, may prove to be a major kickstart for fully automated, everyday banking services.

DoorDash Inc. (DASH)

Doordash Inc. is a food delivery app that connects restaurants, drivers, and customers through their online app. This past Thursday, DoorDash officially became more valuable than Uber, hitting close to a $75 billion market capitalization. That DoorDash is more valuable than Uber’s Rides and Eats business is pretty incredible on its own, considering DoorDash does just one of those things in basically just one country (the US was 99.5% of its revenue last year) compared to Uber’s ride sharing operations which have already been established across roughly 70 countries. 

Maintaining control of 57% of the US food delivery market, DoorDash has been somewhat benefitting from the recent rise of the delta variant of Covid. Delta, the lockdowns, and changes in indoor dining regulations, has reinvigorated the demand for food delivery while doing quite the opposite for ride-sharing, which is still a major component of Uber’s business.

In December 2020, the company went public through an initial price offering (IPO), on which day the stock closed at a modest $182 per share. Today, the stock sits at $222 per share, with a market cap of $75 billion. To date, the company has yet to book an annual profit; however, they grew immensely during the COVID-19 pandemic. They grew their total revenue from 291K in 2018 to 885K in 2019 to 2.88M in 2020. Should their growth continue, they are well on the way to becoming profitable.

If you would like to learn more about the stock market and its components, you may want to look into the Yeshiva University Stock Exchange (YUSE) Club. Learn more about the YUSE at Yusegroup.weebly.com.

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