1 Reason to Buy Lemonade Stock (LMND)

Core Viewpoint - Lemonade's stock experienced significant growth in 2024 but has seen a slowdown in 2025, raising concerns among shareholders about its volatility. However, the company's innovative use of AI and its growing customer base suggest potential for future growth, making it a candidate for investment consideration [1]. Group 1: Business Model and Technology - Lemonade utilizes artificial intelligence (AI) and machine learning to effectively price insurance policies with minimal human intervention, enhancing its digital business model [3]. - The company has seen a 21% year-over-year increase in membership, surpassing 2.5 million customers in the first quarter of 2025 [3]. Group 2: Financial Metrics - In-force premium, a key metric for insurance companies, rose by 27% year over year in the first quarter, while the average premium per customer increased by 4% to $396 [4]. - The gross loss ratio remained stable at 73% in the latest quarter, down from 83% the previous year, indicating a positive trend in loss management [5]. Group 3: Future Outlook - Adjusted free cash flow turned positive in 2024, with management projecting positive adjusted EBITDA before the end of 2026 and positive net income expected in 2027, which could lead to a significant increase in stock value [6].