Lemonade (LMND) AI Stock Analysis

• Market Cap: $3.83B
• Dividend Yield: N/A
• Average Volume (3M): 2.94M
• Price to Earnings (P/E): ―
• Beta (1Y): 2.04
• Revenue Growth: 22.91%
• EPS Growth: 4.95%
• Country: US
• Employees: 1,235
• Sector: Financial
• Sector Strength: 75
• Industry: Insurance - Property & Casualty
• EPS (TTM): -0.60
• Shares Outstanding: 73,886,410
• 10 Day Avg. Volume: 1,985,962
• 30 Day Avg. Volume: 2,942,004
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.88
• Enterprise Value/Revenue: 5.59
• Enterprise Value/Gross Profit: 14.03
• Enterprise Value/Ebitda: -17.82
• 1Y Price Target: $43.83
• Price Target Upside: -13.55% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 8

• Rating: 55 Neutral
• Price Target: $61.00 ▲(20.32% Upside)

Lemonade's overall stock score reflects a company with strong growth potential but significant profitability challenges. The earnings call provided positive insights into growth and operational improvements, but financial performance and valuation concerns weigh heavily. Technical indicators suggest some positive momentum, but caution is advised due to valuation and profitability issues.

Positive Factors

Financial Performance

In-force premiums (IFP) grew 29%, slightly above the 27% estimate, and revenue grew 35%, to $164 million, above the $161 million estimate, reflecting favorable ceding commissions.

Loss Ratio Improvement

The net loss ratio of 69% was better than the 80% estimate and improved 10% year-over-year.

Negative Factors

Competitive Challenges

Lemonade is looking to expand into a competitive and uncertain auto insurance market, which makes business growth more difficult.

Valuation Concerns

A best-case scenario is needed to justify Lemonade's current stock valuation, as it hasn't yet demonstrated profitability and runs at a higher operating leverage.

Lemonade Business Overview & Revenue Model

Company Description

Lemonade, Inc. provides various insurance products in the United States and Europe. Its insurance products include stolen or damaged property, and personal liability that protects its customers if they are responsible for an accident or damage to another person or their property. The company also offers renters, homeowners, pet, car, and life insurance products, as well as landlord insurance policies. In addition, it operates as an agent for other insurance companies. The company was formerly known as Lemonade Group, Inc. and changed its name to Lemonade, Inc. Lemonade, Inc. was incorporated in 2015 and is headquartered in New York, New York.

How the Company Makes Money

Lemonade generates revenue primarily through the sale of insurance premiums from its various products, including renters, homeowners, and pet insurance. The company uses a subscription-based model where customers pay monthly premiums to maintain their coverage. Key revenue streams include the collection of premiums, which are then pooled together to pay for claims. Additionally, Lemonade retains a fixed percentage of the premiums as revenue, while the remainder is allocated to reinsurance and claims. The company has also established partnerships with various reinsurance companies to mitigate risk and ensure financial stability. These partnerships help Lemonade manage its claims and maintain profitability. The company’s unique business model, which includes the Giveback program, positions it favorably in the market, appealing to socially conscious consumers, which can further drive customer acquisition and retention.

Lemonade Financial Statement Overview

Summary

Lemonade shows strong revenue growth but struggles with profitability and cash flow. Persistent losses and negative cash flow highlight the need for strategic improvements in cost management and operational efficiency. The balance sheet is relatively strong with low leverage, but profitability and cash generation are critical areas requiring attention.

Income Statement

Lemonade's income statement shows significant revenue growth, with total revenue increasing from $94.4 million in 2020 to $409.6 million in TTM 2025. However, the company has not achieved profitability, as evidenced by persistent negative net income and EBIT margins. The gross profit margin remains high, which is positive, but the negative net profit margin indicates a need to control operating expenses and improve efficiency.

Balance Sheet

The balance sheet reflects a strong equity position relative to debt, with a debt-to-equity ratio remaining low. However, stockholders' equity has decreased over time, and the return on equity is negative due to ongoing losses. The equity ratio remains stable, indicating a decent financial structure, but the company must address its continuous losses to enhance financial stability.

Cash Flow

Lemonade's cash flow statement shows negative free cash flow, although there is improvement in recent periods. The operating cash flow remains negative, highlighting challenges in generating cash from operations. The company has relied on financing activities to support its cash position. Improving free cash flow to net income ratio is essential for future financial health.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	600.70M	526.50M	429.80M	256.70M	128.40M	94.40M
Gross Profit	239.50M	172.70M	90.20M	28.40M	22.90M	20.40M
EBITDA	-188.60M	-183.90M	-209.80M	-282.60M	-229.90M	-119.10M
Net Income	-204.00M	-202.20M	-236.90M	-297.80M	-241.30M	-122.30M
Balance Sheet
Total Assets	1.93B	1.85B	1.63B	1.69B	1.51B	828.70M
Cash, Cash Equivalents and Short-Term Investments	670.30M	1.01B	264.50M	1.03B	1.07B	577.40M
Total Debt	143.70M	107.20M	43.10M	35.20M	22.30M	0.00
Total Liabilities	1.41B	1.26B	924.40M	823.90M	522.30M	287.70M
Stockholders Equity	527.10M	593.40M	708.90M	866.80M	988.20M	541.00M
Cash Flow
Free Cash Flow	-21.40M	-20.80M	-128.30M	-173.10M	-154.00M	-96.10M
Operating Cash Flow	-11.60M	-11.40M	-119.10M	-163.00M	-144.60M	-91.70M
Investing Cash Flow	-62.40M	40.60M	88.70M	181.10M	-804.80M	50.10M
Financing Cash Flow	102.70M	87.70M	15.40M	3.60M	649.60M	341.10M

Lemonade Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 50.70
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LMND, the sentiment is Neutral. The current price of 50.7 is below the 20-day moving average (MA) of 54.19, above the 50-day MA of 46.27, and above the 200-day MA of 38.24, indicating a neutral trend. The MACD of 1.64 indicates Positive momentum. The RSI at 49.78 is Neutral, neither overbought nor oversold. The STOCH value of 14.39 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LMND.

Lemonade Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SKWD	79 Outperform	$2.00B	15.43	16.20%	―	22.20%	5.78%
STC	77 Outperform	$1.98B	22.71	6.27%	2.70%	14.00%	100.44%
SAFT	76 Outperform	$1.08B	12.71	10.08%	5.02%	18.52%	65.66%
HCI	73 Outperform	$2.26B	15.11	23.90%	0.92%	9.62%	-18.69%
Sector *	68 Neutral	$18.05B	11.73	10.24%	3.73%	9.66%	1.70%
ROOT	65 Neutral	$1.37B	18.53	27.52%	―	59.76%	―
LMND	55 Neutral	$3.83B	―	-35.10%	―	22.91%	4.95%

Lemonade Corporate Events

Lemonade Announces New Reinsurance Program Terms

Lemonade, Inc. announced the terms of its reinsurance program effective from July 1, 2025, to June 30, 2026, involving a reduction in the ceded proportion of its quota share reinsurance from approximately 55% to 20%. This strategic move is expected to maintain a variable ceding commission rate similar to previous agreements, potentially impacting the company’s financial strategy and stakeholder interests.

Lemonade Elects New Directors at Annual Meeting

On June 4, 2025, Lemonade held its annual meeting of stockholders, with 68.41% of the voting power represented. During the meeting, Shai Wininger and Dr. Samer Haj-Yehia were elected as Class II Directors until 2028. Additionally, the appointment of Ernst & Young LLP as the independent registered public accounting firm for 2025 was ratified, and the compensation of the company’s named executive officers was approved on a non-binding basis.