What happened

Shares of Lemonade (NYSE:LMND) fell 26% in March 2021, according to data from S&P Global Market Intelligence. The insurance technology expert posted Street-stumping results early in the month, but the surprise wasn't enough to sustain Lemonade's soaring stock price.

So what

Lemonade's fourth-quarter revenue landed at $20.5 million, comfortably ahead of Wall Street's $19.1 million consensus estimate. Adjusted net losses of $0.60 per share also beat the Street's expectations of a $0.65 loss. The customer list grew 56% at 1 million names, and the average insurance premium per customer increased by 20%. However, management's guidance for the next quarter pointed to sales just below analysts' then-current projections. Lemonade's shares fell 13% over the next two days as investors digested the report and the concomitant analyst reactions.

A lemon slides down a red charting arrow, headed for an upward trajectory at the end of the slide.

Image source: Getty Images.

Now what

The road ahead may be bumpy and unpredictable, but Lemonade has a very real chance to disrupt the enormous insurance market. The company's reliance on data-driven sign-up and insurance-claim procedures gives it lower operating costs, which are passed on to customers in the form of lower premiums. I'm so impressed by Lemonade's business prospects that I bought a few shares in December and I'm sorely tempted to add to my position at these low prices. Market-beating results over the long term are far more important than lumpy revenue streams in the early going.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.