This Feels Like $HIMS at $7
When I started buying $HIMS at $7, everyone thought I was early, maybe even reckless.
Wall Street couldn’t get past the GAAP losses.
But I was looking deeper: cohort curves, margin expansion, product velocity.
That bet played out.
Now I’m seeing the same setup with $LMND—and I believe the market is missing it.
The Setup
While everyone’s still hung up on net losses, Lemonade has flipped the script:
In-force premium just passed $1B
6 straight quarters of accelerating YoY IFP growth
Gross loss ratio stable at 73%, hitting internal targets
Operating expenses are flat, even as premiums scale
Customer count >2.5M, up 21% YoY
Premium per customer now $396, up 4% YoY
Adjusted gross profit up 25% despite California wildfire drag
Adjusted FCF would have been positive in Q1 if not for that one-time event
Short interest: 16.9M shares shorted (~30% of float), $733M bet against it
Customer count, IFP, and premium per customer are compounding steadily — setting the foundation for long-term margin expansion.
Loss ratios are stabilizing within target — a critical milestone in early-stage insurance plays.
This is mispriced asymmetry.
And I want to be positioned before the narrative catches up to the numbers.
Built Different
Legacy insurers are fighting gravity:
Trillions in debt
Bloated cost structures
Tech built for another era
Meanwhile, Lemonade is:
Full-stack AI from the ground up
No brokers, no paper
Native app-first experience
Their platform cancels your old policy, evaluates your new address, reprices your plan, and binds your policy in seconds.
That’s not a vision. That’s what they’re doing right now.
They’re not "going digital." They are digital.
Flat OpEx against surging IFP highlights Lemonade's digital-native architecture and cost leverage.
Operating Leverage Is Already Showing Up
From Q3 2022 to Q1 2025:
IFP grew from $609M to $1,008M
OpEx excluding growth spend went from $87M to $89M
That’s almost zero cost increase, with 65% IFP growth.
They’ve hit escape velocity on their fixed cost base.
Gross profit continues to grow alongside margin consistency — a classic sign of early operating leverage.
Margins are holding up as scale increases. That’s rare in insurance — and it’s a major signal.
Headcount has barely moved — a clear sign of scalable efficiency.
Why the Market Doesn’t Get It Yet
Insurance is slow. Painfully slow.
It’s regulated. Capital-intensive. Built on long feedback loops.
But that’s exactly why Lemonade has the moat.
They’ve spent the last 8 years doing the hard work incumbents can’t stomach:
Full-stack build
AI-native workflow
Cross-border product launches
Underwriting refinement
Regulatory lift
Now they’re ready to compound.
Loss ratios have remained stable even with wildfire volatility — signaling underwriting discipline.
The AI Stack
55%+ of claims processed automatically
Fraud detection embedded from onboarding
AI bots (Jim & Maya) run end-to-end workflows
All interactions are measured, recorded, optimized
Ingests 1,000s of micro-signals for better risk modeling:
Time of day user signs up
Whether they read fine print
Which keywords they used
What items they insure
Lemonade’s platform unlocks stronger unit economics as they scale — gross profit per customer continues to expand. Shai Wininger’s vision is unfolding: an insurance company that runs itself.
CAC, LTV, and the Long Game
90% of Lemonade’s customers are first-time insurance buyers.
They start with renters. Then add homeowners. Then car. Then life.
And when they bundle? Risk profiling improves. Margins go up. Loyalty deepens.
They’re playing the long game:
Acquire young, safe customers early
Grow with them over decades
Use AI + bundling to maximize margin and minimize loss
Their LTV/CAC ratio is 3:1+, validated by both internal data and General Catalyst’s "Synthetic Agent" loan structure.
This flywheel is already spinning.
Early customers compound in value as they expand across product lines — a natural LTV engine.
Valuation Math
This is the part that makes people uncomfortable.
But let’s walk through it anyway:
If $LMND hits 1% market share by 2040:
That’s $100B in revenue
15% op margin = $15B operating income
35x multiple = $525B market cap
That’s a 200x from today.
Even if you're conservative and cut it in half... still a monster outcome.
You don’t need them to dominate. You just need them to survive and compound.
Even with conservative assumptions, this is one of the most asymmetric public market bets I’ve seen.
The Short Setup
16.9M shares shorted
Days to cover dropped from 9.8 to 5.6
Short interest = ~30% of float
If the story flips, the unwind could be violent. The setup is there.
The "Obvious in Hindsight" List
Every cycle has one:
$AMZN: Everyone mocked the losses
$SPOT: "Streaming isn’t profitable"
$NFLX: "Mailing DVDs isn't tech"
Then the inflection hits. And it’s obvious.
Lemonade is building toward that moment.
They’ve absorbed the pain.
They’ve scaled the tech.
They’ve cracked CAC.
They’ve stabilized loss ratios.
It’s not a startup anymore.
It’s an early-stage platform compounding quietly.
Final Word
$LMND is operating in a $10T industry where no one owns more than 4% market share.
They’re AI-native.
They’re lean.
They’re global.
They’ve been misunderstood because they invested in the future before the numbers made it obvious.
Now the numbers are catching up.
This is what conviction looks like before consensus arrives.
It’ll be obvious in hindsight.
Subscribe for deep dives like this before they go mainstream.
Alpha Before It Prints — Where conviction beats consensus.
🔗 Connect with me:
✖️ Twitter | 💼 LinkedIn | 🚀 Subscribe
© 2025 Alpha Before It Prints
Unsubscribe