Lemonade (LMND -2.73%) has now fallen by more than 70% since reaching an all-time high earlier in 2021, but by some metrics is still an expensive stock. In this Fool Live video clip, recorded on Nov. 18, Fool.com contributors Matt Frankel and Dan Caplinger discuss whether Lemonade's stock is cheap or expensive now, and what investors should keep in mind.

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Dan Caplinger: Growth investors aren't used to thinking in terms of some of the financial metrics that you have to dig into when you have an insurance company. It can be hard to keep your eyes on the ball in terms of what you're looking at for long-term metrics. It's easy to get caught up in quarter-to-quarter loss ratios and catastrophic events that cause near-term financial pain. I think that, that's been something that Lemonade has proven to be just as vulnerable to as any other insurance company in the world that does these property, casualty lines of business. It's the way that it works.

In many ways, I think that if you do believe that the long-term strategy is intact, that you think that more customers are going to increasingly go to Lemonade, that those customers, once they are there, they're going to gradually but steadily add new lines of business, especially as Lemonade makes new lines available, like Lemonade Car. If they take a look at other products as well, as I believe they intend to do, building out that financial ecosystem. 

Then long-run, you hear Lemonade talked about the same discussions as you hear about SoFi (SOFI -0.80%) and Square (SQ 0.15%) and PayPal (PYPL -1.12%) and companies that are well beyond insurance. But using Lemonade in this case, using insurance as its foot in the door to try to build itself into even larger, broader financial services company. I think that's the bull thesis going forward. In many ways, these quarter-to-quarter results that you get don't really tell you a whole lot about that long-term perspective, except to the extent that you can see how loyal customers are and how their cross-selling expansion plans are going. The better that goes, the better that long-term thesis sounds in my opinion. Matt.

Matt Frankel: I want to make three quick points about Lemonade. One, this is not a cheap stock by any means, but it's a lot cheaper than it was. It's trading at about 37 times trailing 12-month sales. That's not bad for a company growing at 86% year-over-year gross premium growth. That's not an unreasonable valuation. The auto insurance market is a huge opportunity for the company, $288 billion in annual premium revenue. It's a type of insurance people have to have. The renters insurance market is $4 billion in size. That's Lemonade's core business today so big opportunity. Last, Jason mentioned the Metromile (MILE) acquisition. This is an all-stock deal that, now that Lemonade fell after earnings, Lemonade is paying about $350 million worth of stock for Metromile. They're getting 49 state insurance licenses. Lemonade has one today in Illinois. They're getting 49 state insurance licenses and over $100 million in in-force premium. 

Lemonade's total in-force premium, today is $350 million. A big increase. Metromile has $250 million of cash on its balance sheet. They're paying $350 million, getting $250 million in cash. They are stealing Metromile for the price they're paying and giving one share for every 19 Metromile shares. It works out to roughly $100 million enterprise value they're paying for Metromile. That's a huge acquisition in terms of getting the car business to where it needs to be, meaning a nationwide roll-out. Because if Lemonade could just sell its existing customers who pay over $1 billion in annual auto insurance premiums, it's going to be a big deal for the company. Right now, Lemonade trades at 37 times sales. If that multiple holds after their auto business is rolled out nationwide, it's going to be a much more expensive stock in the future in my opinion.