Trupanion stocks decline as Chewy-Lemonade deal poses competition risk (NYSE: LMND)

Marcela Ruth Romero

Trupanion pet insurer (NASDAQ:TRUP) the stock fell as much as 7.7% Thursday morning after Piper Sandler analyst John Barnidge argued that Chewy’s (NYSE: CHWY) expanding its insurance and wellness offering, CarePlus, using plans offered by Lemonade (NYSE: LMND) increases competition for TRUP.

Meanwhile, shares of pet-focused e-commerce platform Chewy (CHWY), +3.7%and P&C insurer Lemonade (LMND), +2.7%took a bid.

The Chewy-Lemonade partnership means there will be “competition for TRUP for Chewy’s shelf space, which is negative for TRUP in our view as it suggests the potential for slower growth via the online distribution versus before and the commoditization of Chewy’s shelf,” Barnidge, who views TRUP stock as a neutral pick, wrote in a note to clients.

Recall December 2021 when Trupanion (TRUP) partnered with Chewy (CHWY) to roll out a range of pet health and wellness insurance plans through the latter’s platform. It was to be an exclusive alliance, Barnidge stressed.

Seeking Alpha’s Quant system, meanwhile, warned investors in March that TRUP stock was at risk of performing poorly due to declining growth and its price point being too high. Since then the stock has fallen 38% to its lowest since July 2020.

In August, Piper Sandler cut Trupanion’s stock to Neutral on a softer outlook for 2022.

Martin E. Berry