Lemonade (LMND) shares rallied more than 30% this morning after the artificial intelligence (AI) powered insurance firm reported better-than-expected earnings for its third financial quarter.
More importantly, the management’s guidance for Q4 revenue also topped expectations, signaling continued momentum through the remainder of 2025.
Following the post-earnings rally, Lemonade stock is trading at more than triple its price in early April.
Is Lemonade Stock a ‘Buy’ After Q3 Earnings?
Lemonade’s improving unit economics make an even stronger investment case for the New York-headquartered insurance firm.
The company’s net loss ratio, a key measure of underwriting efficiency, dropped to 64%, marking a dramatic improvement from 81% a year ago.
This signals Lemonade’s AI-driven claims infrastructure is finally maturing, benefiting from years of data refinement and real-world feedback.
With lower claims costs and smarter automation, profitability seems to be inching closer to reality. If this trend holds, LMND stock’s post-earnings surge may reflect more than short-term hype – it could be pricing in a structural shift.
What Could Drive LMND Shares Higher in 2026?
In Q3, Lemonade’s in-force premium and customer count outpaced a modest 5% bump in premium per customer, indicating growth is being driven by organic customer traction, not just price hikes.
LMND shares are worth owning at current levels also because management remains committed to expansion.
The company’s auto insurance offering is steadily penetrating new U.S. markets while its renter and homeowner policies continue to gain ground across Western Europe.
From a technical perspective, Lemonade shares are trading handily above major moving averages (50-day, 100-day, 200-day), reinforcing that bulls remain in fully in control.
Finally, its price-sales (P/S) multiple of a little under 9x isn’t particularly alarming given Lemonade is basically an AI stock.
What’s the Consensus Rating on Lemonade?
Heading into the earnings release, Wall Street analysts had a consensus “Hold” rating on Lemonade stock with price targets going as high as $60.
However, it’s reasonable to assume that some of them will choose to lift their estimates on LMND shares following the company’s blockbuster quarterly report.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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