Lemonade, Inc. (LMND): A Bull Case Theory

We came across a bullish thesis on Lemonade, Inc. on Archive Invest’s Substack by Felix. In this article, we will summarize the bulls’ thesis on LMND. Lemonade, Inc.'s share was trading at $53.43 as of September 24th.

Lemonade Inc. (LMND) has reached a historic milestone of $1 billion in-force premium (IFP) just 8.5 years after issuing its first policy, making it the fastest insurer in history to achieve this scale. The company’s Q2 2025 results highlighted 29% year-over-year IFP growth to $1.08 billion, with revenue up 35%, marking its seventh straight quarter of accelerating momentum. What sets Lemonade apart is its AI-first platform that underpins renters, homeowners, pet, and auto insurance, enabling rapid claims processing—sometimes in under three seconds—and delivering compounding data advantages.

The model has proven resilient even amid inflationary pressures and climate-driven losses that continue to burden traditional carriers. Gross loss ratios improved 12 points to 67% overall and 13 points in auto to 82%, validating the underwriting and risk selection precision of its AI-driven approach. Lemonade Car, now surpassing $150 million in IFP, demonstrates profitable expansion in the largest insurance market segment, while the European business is scaling even more efficiently than early U.S. operations, generating twice the new business per growth dollar. Management reaffirmed 2025 adjusted EBITDA loss guidance of $135–$140 million, with sequential improvement expected each quarter, creating visible progression toward breakeven.

Unlike incumbents, locked into legacy systems, Lemonade’s integrated architecture enables cross-selling synergies, margin expansion, and global scalability. With market dynamics shifting decisively toward AI-first platforms, Lemonade’s accelerated growth, improving fundamentals, and expanding international footprint signal that the company may be nearing an inflection point where its compounding advantages translate into durable market leadership and a rerating of its valuation.

Previously we covered a bullish thesis on Lemonade, Inc. (LMND) by Oliver | MMMT Wealth in April 2025, which highlighted the company’s resilience from tariff risks due to its focus on pet and renters insurance with limited auto exposure. The company’s stock price has appreciated approximately by 90.07% since our coverage. This is because the thesis played out amid diversification benefits. The thesis still stands as Lemonade continues compounding value. Felix shares a similar but emphasizes on the AI-driven scale and profitability trajectory.

Lemonade, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held LMND at the end of the second quarter which was 22 in the previous quarter. While we acknowledge the potential of LMND as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.