What happened

Lemonade (LMND 8.81%) wasted no time cooking up a new recipe for his company, and investors were rewarding the company for it. On Monday, following the announcement of an asset sale, shares of the next-generation insurer rose nearly 9% by late afternoon.

So what

This morning, Lemonade announced in a succinct press release that it had sold Metromile’s recently acquired Enterprise Business Solutions (EBS) business. The buyer is the EIS digital insurance platform operator. Neither the price nor the terms of the deal were disclosed; Lemonade only said it was done entirely in cash and happened after Metromile was taken over by Lemonade.

Investors were clearly not concerned about the price the EBS unit might have reached. Instead, they were likely encouraged by the fact that Lemonade is active and efficient in shaping its brand new business unit to suit its needs.

Generally speaking, they are pleased with the acquisition of Metromile, as many see the artificial intelligence (AI)-based car insurance specialist as complementary to Lemonade’s consumer product line. The Metromile deal only resulted in an 11% drop in the share price for Lemonade after its announcement – ​​a relatively good performance for a company that suddenly reveals that it is about to spend a lot of money for a new asset. And Lemonade rose late last week when it announced the closing of the takeover.

Now what

Now, however, it’s put up or shut up time for Lemonade with her shiny new toy. Yes, Metromile has clear synergistic properties with its parent, but Lemonade has yet to prove that it can turn the asset into a reliable profit generator. Investors’ eyes will be on Lemonade as it continues to integrate the once-independent business into its operations.

Eric Volkman has no position in the stocks mentioned. The Motley Fool holds positions and recommends Lemonade, Inc. The Motley Fool has a Disclosure Policy.