Insurance technology company Lemonade (LMND 1.19%) has been a terrible performer in recent months, with shares now down by more than 60% from their 2021 high. In this Fool Live video clip, recorded on May 20, contributor Matt Frankel, CFP, explains to his colleague Brian Withers why he's still excited to own the stock. 

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Matt Frankel: They are an insurance company that really targets the millennial generation, the younger generation who doesn't want to deal with the traditional way of buying insurance. There are few industries in the world I can name that have so many consumer pain points as insurance. I don't know, Brian, if you've ever bought life insurance, not a fun process. 

Brian Withers: Yes, I have.

Frankel: When I did they had to send a nurse over to my house to draw blood, they had to call my doctor. I needed a note explaining one of my medications. It was a really cumbersome process. Forget the online aspect of it. I applied for it online, but it was still all this behind-the-scenes nonsense I had to do. Rate shopping aside, it's a terrible process. Lemonade aims to take the entire insurance process and make it happen in seconds not days or weeks.

Their core products are renters insurance, that's really where they've built up their million-plus customers, as I'll discuss in a second. They also offer homeowners insurance to people who have graduated from renting to homeownership, and they also offer pet insurance. They recently started offering life insurance and they are just about to get into the car insurance market.

Let's take a step back for a second. Lemonade peaked at about $180 a share earlier this year. It's now trading at $77. That's a pretty big drop. I think out of all the stocks on my portfolio, Lemonade has been the hardest hit. Let's take a look at why. Lemonade started falling well before their latest earnings report was issued earlier this month, but that certainly was the catalyst for the latest move downward.

At first glance, some of the numbers look pretty strong, and specifically when it comes to the long-term growth of the business. In-force premium, which is the volume of the total premiums under the brand, grew 89% year over year to $252 million. The average customers paying 25% more to the company than they were a year ago. That can either mean upgrading coverage, that can mean adding another form of coverage, such as renters insurance, a customer adding pet insurance, or something to that effect. The average customer is paying 25% more year over year. That's a pretty impressive revenue expansion.

The customer count is now at about 1.1 million people. Lemonade reached the 1 million threshold in four years. It took a lot of the major insurance companies, State Farm, for example, decades to get to that level. That's really impressive. They really did that by: one, doing the insurance game better, but two, by focusing on a lower-cost form of insurance that younger people need that is not very expensive, that could be underwritten in a matter of seconds, not even minutes, claims are processed really fast.

They've just really done a great job of building up this customer base. To make it even better, Lemonade increased its full-year revenue guidance over what it was. Why did the stock fall? It fell because the company lost money a lot more than people thought they would. I mentioned their primary markets are homeowners and renters insurance. Those big winter storms in Texas that we saw this past year, they're just terrible. They knocked out the power grid, things like that. I remember reading that Texas was hours away from a total power collapse at one point.

An insurance company's loss ratio, by the way, is the percent of the premiums they're taking in that they're paying out to cover claims. In the fourth quarter, it was 73%, which is pretty normal. For every $100 they took in, $73 went out to pay claims. In the first quarter because of those terrible storms and all the losses to homeowners and renters that were incurred, the loss ratio was 121%. Meaning that for every $100 Lemonade pulled in for in-premium, they paid out $121 to cover claims. That's a pretty big loss and that's not including the business expenses like paying their employees or things like that. That's just what they're paying up for claims.

The company did a good job of trying to spin it as a stress test. It's corporate America, they have to make it sound as good as possible. Now we saw what our business can handle. We didn't collapse. We say we did better than the Texas electrical grid for sure. But even so, that was scary to a lot of investors that made the stock go down a little bit. Long story short, here we are about 60% off the highs, my worst performing stock. Lemonade's most exciting growth market that I'm watching in the next few quarters is auto insurance.