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Lemonade (LMND): Rethinking Valuation After Raised 2025 Guidance, Earlier EBITDA Path and Reinsurance Pullback

Simply Wall St · 2d ago

Lemonade (LMND) just reset expectations in a big way, lifting its 2025 guidance while signaling that EBITDA profitability could land earlier than planned, and pairing that with a sharp pullback in reinsurance dependence.

See our latest analysis for Lemonade.

The upbeat guidance and earlier path to EBITDA have reinforced an already strong trend, with a roughly 49% 3 month share price return and a 3 year total shareholder return above 300% suggesting momentum is still building rather than fading.

If Lemonade’s move has you rethinking growth opportunities in financial services, it could be a good moment to explore fast growing stocks with high insider ownership.

Yet with the stock now trading well above consensus targets after a blistering run, investors face a tougher question: Is Lemonade still misunderstood and undervalued, or is the market already pricing in its next leg of growth?

Most Popular Narrative: 38.5% Overvalued

With Lemonade closing at $78.97 against a most popular narrative fair value of $57, the story tilts toward a stretched valuation built on ambitious growth expectations.

The market may be pricing in continued high revenue growth driven by Lemonade's rapid expansion into new product lines and geographies, but this optimism could be unwarranted if ongoing macroeconomic instability and persistent inflation reduce consumer discretionary spending and increase claim costs, which would negatively impact both revenue and net margins.

Read the complete narrative.

Curious how a high growth runway, a step change in margins, and a rich future earnings multiple all intertwine to justify that fair value? The narrative leans on aggressive top line expansion, a sharp swing from losses to profitability, and a punchy valuation multiple that rivals premium insurers. Want to see exactly how those moving parts come together in the model, and what has to go right for the numbers to hold?

Result: Fair Value of $57 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, if Lemonade’s AI driven underwriting scales efficiently or if European growth continues accelerating, faster margin improvement could challenge today’s cautious narrative.

Find out about the key risks to this Lemonade narrative.

Build Your Own Lemonade Narrative

If you see the story differently or want to stress test the assumptions yourself, you can build a personalized view in just minutes using Do it your way.

A great starting point for your Lemonade research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.