Lemonade Pops After Setting Goal For 2027 GAAP Net Profit, But Is It Still Worth the Squeeze?
Even though life gives you lemons, insurer Lemonade hopes you’ll give them money to insure your apartment, home, and car. However, insuring against lemons hasn’t been worth the squeeze for the company. Despite its tech-centric focus, fast policy growth, and proprietary risk tools, the company has yet to book a profit. But after being hammered by the end of the ZIRP era, the company’s stock has rallied over 200% — and its Investor Day on Wednesday saw even more gains.
- jumped 16% on Wednesday after announcing a goal to achieve GAAP net profit by the end of 2027, giving investors a clearer idea of when the insurer might generate a profit.
- On the news, Morgan Stanley raised its outlook on Lemonade from underweight to equal weight, while others adjusted their price targets, suggesting analysts remain skeptical of the firm’s ability to hit targets.
A bitter bite? As part of its Investor Day, the company prepared a 214-slide presentation highlighting recent growth, particularly in its car insurance business. However, analyst Fallacy Alarm notes that the company’s balance sheet — the “most important financial statement of any insurance company” — was hardly a focus. He warns that Lemonade’s current valuation treats it like an industry leader, “valued as if they have already achieved everything they are setting out to do for the remainder of the decade.”
