Lemonade stock price has surged in the past few days, moving to the highest point since February 18. It rose to a high of $40 on Friday, up by 63% from its lowest point in May, valuing the insurance company at over $2.9 billion. It has jumped by 180% from its lowest point since last year.
Lemonade growth is accelerating
Lemonade is one of the top companies seeking to disrupt the insurance industry by offering a digital-first and artificial intelligence (AI) approach.
Customers apply for insurance through its website or mobile application, and interact with an AI chatbot named Maya to answer their questions.
The company uses a flat fee model, where it takes a fixed percentage of premiums to cover its operating costs. As a result, the company does not keep unclaimed premiums as profit, reducing its incentive to deny claims.
The other unique aspect of Lemonade’s business is that it has a giveback pogram, where it gives away the leftover premiums to charities selected by customers. This enables it to qualify as a a public benefit corporation for tax purposes.
Lemonade’s business has done well in the past few years, with its annual revenue soaring from $94 million in 2020 to $526 million last year.
LMND earnings are growing
The most recent results showed that Lemonade’s business did well in the last quarter, with its topline in force premiums soaring by 27% to over $1 billion. It was the sixth consecutive quarter of growth and the first time that the figure crossed the $1 billion mark.
Further, Lemonade’s gross profit rose by 11% even as the company dealt wth the recent California wildfires. The fires impacted its profitability as the adjusted EBITDA loss came in at $47 million. These firses contributed to $22 million of this loss.
Most importantly for Lemonade is the fact that its gross loss ratio has dropped in the past few years. It moved from 88% in Q3’23 to 73% in Q1 of this year and is moving in the right direction. The gross loan ratio compares the claims paid to premiums earned, with the sweet spot being at 60%.
Lemonade’s revenues jumped by 27% to $151 million, and analysts expect the growth will continue in the coming years. The average estimate is that its second-quarter revenue will be $160 million, up by 31.8% from a year earlier.
Lemonade is expected to make $172 million, up 26.5%, while annual revenue will grow to $668 million this year and $872 million in 2026.
Lemodate stock price technical analysis
The daily chart shows that the LMND stock price bottomed at $24.36 on April 8 and then rebounded after its earnings. It moved above the 50-day and 200-day Exponential Moving Averages (EMA).
Lemonade share price has moved above the 38.2% Fibonacci Retracement level at $37.13. It has formed an inverse head and shoulders pattern. It also moved above the key resistance level at $38.45.
The Average Directional Index (ADX) moved to 25, its highest point since January 3, a sign that the trend is strengthening. Also, the Relative Strength Index (RSI) has moved to 80.
Therefore, the LMND share price will likely continue soaring in the coming weeks, with the next point to watch being at $53.7, its highest point on November 26, up by 33% from the current level.
Read more: Lemonade stock price is rising: technicals point to a 150% surge
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