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

We came across a bullish thesis on Lemonade, Inc. (LMND) on Investment Ideas by Antonio’s Substack by Antonio Linares. In this article, we will summarize the bulls’ thesis on LMND. Lemonade, Inc. (LMND)'s share was trading at $35.76 as of 5^th June.

Lemonade has demonstrated remarkable scalability, growing its in-force premium by 65% since 2022 while keeping operating expenses flat, which signals both efficient capital deployment and a robust engineering culture. Its AI-driven infrastructure enables it to operate with significant leverage, but the central question remains whether this AI also allows Lemonade to price insurance risk more accurately than traditional players. Although visibility on this front is limited, management's execution over the past few years suggests promising odds of solving the risk-pricing puzzle.

Currently, Lemonade’s unit economics remain negative, as reflected in its free cash flow per share, though the trajectory is improving. The company’s strategy hinges on scaling first, subsidizing customers to build a proprietary dataset rich enough to power its AI models, rather than attempting to acquire an external, multidimensional dataset like Meta’s social graph.

This approach is more feasible and aligns with management’s long-held goal of reaching EBITDA breakeven by 2026. CEO Dan Schreiber’s comments in the Q1 2025 earnings call highlighted Lemonade’s real-time, AI-powered underwriting capabilities, which allow granular, customer-level investment decisions that no other insurer appears to match.

While lacking a dense social graph makes Lemonade vulnerable to future disruption from data-rich platforms, its steadily declining gross loss ratio, down to 59% excluding the California wildfires, indicates rapidly improving underwriting precision. If this trend holds, Lemonade could evolve into a winner-takes-all player in AI-native insurance. Still, negative cash flow introduces risk, and although the price-to-sales ratio has doubled over the past year to 4.

Previously, we covered a bullish thesis on Lemonade (LMND) by Steve Wagner, which aligns with Antonio Linares’ June 2025 analysis, emphasizing scalability and AI-native infrastructure. The stock has since seen an appreciation of approximately 15%. Both highlight Lemonade’s improving loss ratios, disciplined cost control, and trajectory toward breakeven. However, Wagner leans on near-term financial execution and intrinsic valuation upside, while Linares frames Lemonade as a long-term AI data flywheel, focusing more on structural competitive advantages. Together, they reinforce confidence in Lemonade’s upside, though with differing emphasis on timeline and tech differentiation.

Lemonade, Inc. (LMND) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held LMND at the end of the first quarter which was 25 in the previous quarter. While we acknowledge the risk and potential of LMND as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.