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

Core Thesis - Lemonade, Inc. is positioned as an AI-native disruptor in the insurance industry, demonstrating rapid growth and disciplined cost control while expanding its customer base [2][3]. Customer Growth and Financial Performance - The company reached 2.69 million customers, adding 148,000 quarter-over-quarter, with in-force premiums (IFP) rising 29% year-over-year to $1.083 billion, exceeding guidance by $19 million [2]. - Operating expenses (excluding growth spend) remained flat, indicating progress towards an autonomous, AI-driven insurance platform [3]. - Loss ratios improved to 70% (TTM) from 79% the previous year, reflecting better underwriting precision and telematics adoption [3]. Strategic Initiatives and Market Position - The reduction in reinsurance reliance from 55% to 20% indicates growing confidence in the company's risk models and balance sheet strength, positioning it for faster top-line growth [4]. - European markets present significant opportunities due to higher telematics adoption and fragmented incumbents, while U.S. car insurance expansion is gaining traction with strong conversion rates [4]. Valuation and Future Outlook - Trading at approximately 10x FY26 gross profit for over 50% growth, Lemonade appears undervalued relative to its growth trajectory [5]. - Management raised FY25 guidance for IFP and revenue, reiterating the potential for EBITDA profitability by 2026, possibly earlier [3]. Historical Performance - The stock has appreciated approximately 156.70% since the previous bullish thesis coverage in April 2025, highlighting the company's resilience and growth potential [6].