Is Lemonade Stock a Buy?
Once the darling of growth investors, shares of digital insurance company Lemonade (NYSE: LMND) have plunged as it racks up losses in its quest to disrupt the insurance industry. With growth investing out of fashion in the current macroenvironment, the stock is down more than 60% over the past year. However, there are many signs of a robust business with a huge future ahead. Is now the time to buy Lemonade stock?
Lemonade set out to shake up the insurance industry with its artificial intelligence-powered model and digital interface. It also donates money left over from consumer policies to a charity of the policy holder's choice. This trifecta alleviates many of the pain points of buying insurance. Buying insurance digitally means doing it on your own time and not feeling pressure from an agent. Using machine learning to power the model should lead to more accurate policy pricing, a win-win for both company and customer. And giving the leftover money to charity takes away the incentive to deny claims.
Customers are slowly being won over, and Lemonade has posted robust growth since it went public two years ago. Its top-line growth metric is in-force premium (IFP), which is the average total policy amount for the trailing 12 months. IFP increased 54% year over year in the second quarter to $458 million. Customer count rose 31% to nearly 1.6 million.
Source Fool.com
