LMND - Why Lemonade's Technology And Innovative Business Model Set It Apart From Legacy Insurance Companies

2024-05-07 10:06:40 ET

Summary

• Lemonade is leveraging AI and data analytics to streamline its operations.
• It is working towards achieving positive net cash flow by the beginning of 2025.
• Look for the company to roll out auto insurance by the beginning of next year.

When I last wrote about Lemonade (LMND) , it was just after the company reported its fourth quarter 2023 earnings. Investors were disappointed with revenue guidance. Management didn't enthuse investors when they stated that the company would double spending in 2024, but that spending wouldn't come near doubling topline growth. The stock subsequently dropped almost 28%. At the time, I still recommended that investors willing to speculate should invest a small portion of their portfolio in the stock. The following chart shows that management only expects to achieve 26% year-over-year revenue growth by the end of 2024.

Lemonade just reported its first quarter 2024 earnings report in which it grew In-Force Premium ("IFP") by 22%, exceeding company guidance of 21%, produced $119.1 million in revenue, beating analyst estimates by approximately 5%, and had an earnings per share ("EPS") loss of $0.67, beating analysts' estimates by $0.11. However, the stock price barely budged several days after reporting earnings as investors remained wary of the company. ...

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