Key Points
Lemonade's AI-powered business is firing on all cylinders.
Its stock looks reasonably valued relative to its growth potential.
- 10 stocks we like better than Lemonade ›
Lemonade (NYSE: LMND), the online insurer that used AI chatbots and algorithms to streamline the onboarding and claims processes, went public at $29 per share in July 2020. Its stock subsequently went through some wild swings, but it now trades at about $55. Will this volatile stock generate sweeter returns by 2030, or will it turn sour?
Image source: Getty Images.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
What happened to Lemonade over the past five years?
Lemonade's simplified approach to buying insurance attracted many younger and first-time insurance buyers. It initially only offered homeowners and renters insurance, but it expanded its platform with term life, pet health, and auto insurance policies after its public debut.
Lemonade served 2.98 million customers at the end of 2025. That's nearly triple the 1.00 million customers it served at the end of 2020. It's still tiny compared to insurance leaders like Allstate (NYSE: ALL), which serves over 16 million households, so it could have plenty of room to grow.
Lemonade, like most insurance companies, gauges its growth by its total number of customers, its growth in in-force premiums (IFP), and gross earned premiums (GEP). The sustainability of its business can be measured by its gross loss ratio, which should stay below 100%, and its adjusted gross margin, which should ideally expand as economies of scale kick in. All of those key performance metrics improved over the past five years.
|
Metric |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
|---|---|---|---|---|---|---|
|
Customer Growth (YOY) |
56% |
43% |
27% |
12% |
20% |
23% |
|
IFP Growth (YOY) |
87% |
78% |
64% |
20% |
26% |
31% |
|
GEP Growth (YOY) |
110% |
84% |
68% |
37% |
23% |
28% |
|
Gross Loss Ratio (TTM) |
71% |
90% |
90% |
85% |
73% |
64% |
|
Adjusted Gross Margin |
33% |
36% |
25% |
23% |
33% |
41% |
Data source: Lemonade. YOY = Year-over-year. TTM = Trailing 12 months.
What will happen to Lemonade over the next five years?
In its latest investor day presentation in November 2024, Lemonade predicted it would grow its IFP to $10 billion (compared to $944 million in 2024 and $1.24 billion in 2025) in the "coming years". It also expects its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- which has remained in the red since its IPO -- to turn green sometime in 2026.
From 2025 to 2027, analysts expect Lemonade's revenue to grow at a 46% CAGR, with adjusted EBITDA turning positive in the final year. With an enterprise value of $4.2 billion, Lemonade's stock still looks reasonably valued at 3.5 times this year's sales.
If Lemonade matches those targets, grows its sales at a slower 25% CAGR through 2030, and trades at a more generous five times sales, its stock could more than triple by the final year. It could hit that target as long as it continues to gain new customers, expand its platform, and widen its moat against its larger competitors.
Should you buy stock in Lemonade right now?
Before you buy stock in Lemonade, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lemonade wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $445,995!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,198,823!*
Now, it’s worth noting Stock Advisor’s total average return is 927% — a market-crushing outperformance compared to 194% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of February 26, 2026.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lemonade. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
