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

We came across a bullish thesis on Lemonade, Inc. on Make Money, Make Time’s Substack by Oliver | MMMT Wealth. In this article, we will summarize the bulls’ thesis on LMND. Lemonade, Inc.'s share was trading at $72.16 as of December 2nd.

Lemonade Inc. (LMND) continues to strengthen its position as an AI-native disruptor in the multi-trillion-dollar insurance industry, delivering rapid growth and expanding its customer base while maintaining disciplined cost control. The company reached 2.69 million customers, adding 148,000 quarter-over-quarter, with in-force premiums (IFP) rising 29% YoY to $1.083 billion, beating guidance by $19 million. Growth remains broad-based, supported by European expansion and an accelerating car insurance segment, which achieved its best-ever loss ratio of 82%.

Despite significant growth investments, LMND’s operating expenses (excluding growth spend) were flat, underscoring its progress toward building an autonomous, AI-driven insurance platform. Loss ratios improved to 70% (TTM) from 79% last year, reflecting enhanced underwriting precision and telematics adoption. The company’s LTV/CAC ratio above 3x validates the efficiency of its growth spend, with further upside as cross-sell opportunities in car and home mature. Management raised FY25 guidance for IFP and revenue while reiterating EBITDA profitability by 2026, potentially earlier.

The recent reduction in reinsurance reliance from 55% to 20% signals growing confidence in LMND’s risk models and balance sheet strength, positioning the company for faster top-line growth in coming quarters. European markets present a major opportunity given higher telematics adoption and fragmented incumbents, while U.S. car expansion continues to gain traction with strong conversion rates in new states.

Trading at roughly 10x FY26 gross profit for 50%+ growth, LMND appears undervalued relative to its trajectory. As AI reshapes legacy industries, LMND stands out as a potential next-generation leader redefining insurance economics through automation, scalability, and data-driven underwriting.

Previously we covered a bullish thesis on Lemonade, Inc. (LMND) by Oliver | MMMT Wealth in April 2025, which highlighted the company’s resilience to trade-related risks from its diversified insurance mix. The stock has appreciated approximately 156.70% since our coverage as the thesis played out. The thesis still stands as Oliver | MMMT Wealth provides an updated perspective focusing on LMND’s AI-driven profitability and growth.

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.