I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.
Lemonade is disrupting the insurance industry and has strong growth potential. Whether LMND is sweet or sour depends on your investment goals and risk tolerance.
How to buy shares in Lemonade Stock
- Open a stock trading account - We recommend using Webull as it offers free stocks when you sign-up.
- Confirm your payment details - Add your payment method and fund your account.
- Research the stock - Search for the stock by name or ticker symbol - LMND.
- Decide the amount of shares - Now it is time to decide how many shares you want to buy of Lemonade.
- Purchase shares of LMND - Buy the amount of shares you want with a market order or limit order.
Why we like Webull:
Webull offers commission-free online stock trading covering full extended hours trading, and real-time market quotes.
Trading Fees: $0
Account minimum: $0
Promotion: Up to 5 free stocks (depending on deposit amount)
About Lemonade Inc.
Lemonade is a holding company that seeks to disrupt the insurance industry by selling low-cost insurance that’s easy to purchase online.
Lemonade has no insurance agents or offices where consumers can buy policies. Instead, consumers can go to the Lemonade website or app to click and buy coverage.
The company discourages bogus claims by donating the excess, after costs, to a charity of the buyer’s choice. Lemonade renters’ insurance is as inexpensive as $5 a month, and homeowners’ insurance can be had for as little as $25 a month.
LMND advertises that it can pay claims in as little as three minutes. Powered by artificial intelligence, LMND makes buying insurance easier, processing purchases in 90 seconds.
LMND has more than 1.1 million customers, but the company still has a loss ratio of 80 percent.
Should I Buy Lemonade Stock?
The AI-powered online insurer Lemonade (LMND) is disrupting the insurance market, making it easier to buy renters’ and homeowners’ insurance, health insurance, and life insurance, as well as policies covering cars and pets’ veterinary care.
With younger and first-time insurance buyers as their target audience, LMND offers low prices and easy insurance purchases that take as little as 90 seconds to complete.
However, this holding company isn’t showing a profit just yet, and its losses are growing. LMND’s stock price is at less than half of its 52-week high.
Is this a golden opportunity to buy LMND in a dip, or is LMND a stock to stay away from? Let’s take a look.
Lemonade Price Today
Bull Case
LMND has a sweet upside due to several key factors. Among them are the disruptive nature of Lemonade, its young customer base, and the changing nature of consumer behavior.
These give LMND a sunny future and, since its price is down right now, make it a bargain to buy and hold.
Changing the industry
Purchasing insurance can be confusing and a lengthy process. Dealing with an insurance agent and coming to an office used to be the norm, but not with Lemonade.
LMND is making the insurance-buying process easier and more transparent, changing how the insurance industry operates.
Young clientele
More than 70 percent of Lemonade’s customers are 35 or younger. These customers are likely having their first experience buying insurance, but it likely won’t be their last.
As this population purchases homes and starts families, they’re likely to stick with Lemonade for insurance.
New spending habits
Younger adults are more likely to conduct business online or through apps. Moving from shopping for clothing, electronics, and organic foods online to banking and buying insurance, Millennials enjoy the convenience and ease of Lemonade.
Healthy growth
While LMND is still taking losses, its growth in the number of customers, year over year, is 50 percent, with a growth rate of customers with in-force premiums at 89 percent.
It's loss ratio is growing smaller, and it has a growing revenue.
Low stock price
Lemonade was trading above $188 per share in January 2021. The massive Texas ice storm a month later sent prices downward, and Lemonade’s price per share hasn’t recovered.
This makes a sub-$70 price per LMND share a bargain to buy and hold, awaiting future growth.
Bear Case
There are plenty of reasons to decide that LMND is a lemon of a stock choice. Here are our major concerns about adding Lemonade to your portfolio.
Risk factor
Lemonade is changing how insurance operates, but it’s still a risky bet right now. LMND isn’t showing a profit, and that should be a caution sign for risk-averse investors.
High valuation
As tech and AI-related stocks go, Lemonade is still a high-priced investment option. Investors who want to include growth stocks related to technology and artificial intelligence in their portfolios have plenty of lower-priced options that have higher growth potential.
There are also lower price options for shares of other insurance companies.
LMND is an insurance stock, too
Tech investors should remember that LMND is as much an insurance stock as it is a tech stock. That means natural disasters could send this AI stock downward.
Investing in tech stocks that aren’t related to insurance would be less risky for growth-oriented investors. Investors who want to buy shares of insurance companies could find less risky choices.
Lemonade Competitors
Among technology stocks, several AI options have more potential for growth without the risks that are inherent in the insurance industry. Business software powerhouse Salesforce (CRM), chip makers Micron Technologies (MU) and Nvidia (NVID), and any of the FAANG stocks should be considered when adding technology stocks to a portfolio.
Among insurance stocks, Chubb, Ltd. (CB), MetLife, Inc. (MET), and American International Group (AIG) are all options with strong track records that could perform better than LMND in the short term.
These insurance stocks may be a better fit for risk-averse investors.
Final Verdict
Is LMND a lemon or Lemonade? Like all investments, there is an element of risk in purchasing shares of LMND for your stock portfolio.
Since LMND is a growth stock and isn’t showing a profit yet, buying shares of Lemonade may not be the best choice for investors with a low tolerance for risk.
Those with an interest in technology stocks can find better options that don’t carry the risks insurance companies do. Likewise, those who want to add shares of insurance companies to their portfolios can find better choices than Lemonade.
Because of the risk involved in this company, we see Lemonade as a better option as a smaller investment, something to add to a portfolio’s diversification with plenty of growth potential.
It’s not a good choice to be the core investment of a retirement portfolio. LMND has the potential to be Lemonade, generating sweet profits over time.
If your risk tolerance is low and retirement close, LMND could be a lemon.
Should you invest $1,000 in Lemonade right now?
Before you consider the Lemonade, you'll want to hear this.
An award-winning analyst team just revealed what they believe are the 10 best stocks for investors to buy right now... and the Lemonade wasn't on the list.
The online investing service they've run for nearly two decades, Motley Fool Stock Advisor, has beaten the stock market by over 4X.* And right now, they think there are 10 stocks that are better buys.
I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.
More Posts
