Why Lemonade's AI-Fueled Business Is Getting Squeezed

Growth investors were initially enamored with Lemonade (NYSE: LMND) when it first came public at the end of June 2020. However, six months later, Lemonade ran into the after-effects of the pandemic, which put its business model under stress. Despite quarterly reports showing high customer and premium growth, investors have recently become more concerned about the company's lack of profitability. Here's why Lemonade deserves a vigorous inspection before you decide to invest your hard-earned dollars.

Many growth investors initially believed Lemonade's lofty promises that it could use artificial intelligence (AI) to lower fraudulent claims and exceed older insurers' underwriting performance. 

However, some critics think Lemonade's AI has fewer advantages than the company promotes. For example, AI can suggest poor solutions when encountering circumstances that it has never seen before -- like the high inflation we're currently enduring.

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Source Fool.com