- Lemonade's narrative of using reinsurance to generate a 25% margin is an impossibility in my view.
- Quota share reinsurance does not protect Lemonade's margins.
- Stock is wildly overvalued even when compared to high growth peers.
- Management has made multiple statements that I find potentially misleading and may cause investors to misunderstand the business' operation.
- I believe that the stock is worth $10 today, but potentially worthless in the long run due to management's inexperience in the insurance and the resulting cash burn.
For further details see:
Lemonade: Reinsurance Can't Save This Company, 90% Downside