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Is Lemonade Stock a Buy Right Now?

By Neil Rozenbaum – Nov 9, 2021 at 10:15AM

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Another good quarter and a surprise acquisition might leave shareholders scratching their heads.

In this video, I will go over Lemonade's (LMND 1.88%) Q3 earnings as well as discuss the acquisition of Metromile (MILE) and what that could mean for the business in the short and long term. You can find the video below, but here are some of the highlights. 

Earnings summary

In force premium (IFP) growth accelerated to 84% year over year with IFP of $347 million and about 1.4 million customers, up 45% year over year (YOY). Premium per customer increased 26% YOY to $254. Gross earned premium increased 86% YOY to $80 million. Gross loss ratio was 77%, which is 5% higher than a year ago, but in that time Lemonade has launched pet and life insurance as well as growing the homeowners segment, so that was bound to happen. In the future, the company expects loss ratios across all Lemonade product lines to be below 75%. 


Lemonade announced that it is going to acquire Metromile in an all-stock transaction that implies a fully diluted equity value of approximately $500 million, or just over $200 million net of cash. That acquisition will help Lemonade's car insurance business in various ways. Metromile's car-mounted precision sensors took over 400 million road trips in recent years, covering billions of miles, it is licensed in 49 states, and it has over $100 million of seasoned in-force premium.

For the full insights, do watch the video below, and consider subscribing. 

*Stock prices used were the closing prices of Nov. 8, 2021. The video was published on Nov. 9, 2021.

Neil Rozenbaum owns shares of Lemonade, Inc. The Motley Fool owns shares of and recommends Lemonade, Inc. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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