LMND · Lemonade
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $46.35
Note written ·
Price against the kill line
4.7% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $46.35, on record since 11 November 2026. The shares are down 11.5% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $46.35, over the 50-day moving average and the mid-$40s range held from mid-September to the Q3 report, which would show the shares leading the S&P 500; or a Q4 2026 adjusted EBITDA guide raised above the $9 million top of the range.
Research onlyNot in the portfolio.
Catalyst
Key figures from the filings · Financials
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Net income, latest quarter ($M)
- −43.7
- Net income, four quarters ($M)
- −145
- Shareholders' equity ($M)
- 472
- Price to book value (×)
- 7.3
- Revenue, latest quarter ($M)total revenues, including investment gains and losses
- 336
- Revenue, change on a year (%)
- +72.8
- Market value ($M)
- 3,443
Lemonade is an insurer: net cash, enterprise value and free cash flow are not shown, because a bank's or insurer's cash and investments back its deposits and policies.
All filed numbers
What Lemonade reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 336 | +72.8 | −12.9 |
| first filed | 294 | +79.4 | −14.2 |
| first filed | 258 | +70.6 | −13.4 |
| first filed | 228 | +53.3 | −9.0 |
| first filed | 195 | +42.4 | −18.7 |
| first filed | 164 | +34.5 | −26.0 |
| Pre-tax income ($M) | −43.2 |
| Net income ($M) four quarters: −145 | −43.7 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +4.5 |
| Operating cash flow ($M) | 24.0 |
| Capital spending ($M) | 16.6 |
| Free cash flow ($M) | Not meaningful |
Not meaningful: a bank's or insurer's operating cash flow moves with its deposits, loans and policy reserves, so it is not cash free for its owners.
| Cash and short-term investments ($M) | 442 |
| Debt ($M) credit line | 232 |
| Net cash, cash less debt ($M) | Not meaningful |
| Deferred revenue ($M) | Not reported |
| Backlog, orders not yet delivered ($M) | Not reported |
| Receivables ($M) | 561 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 472 |
Not meaningful: a bank's or insurer's cash and investments back its deposits and policies.
| Market value ($M) | 3,443 |
| Enterprise value, market value plus net debt ($M) | Not meaningful |
| Enterprise value to sales (×) | Not meaningful |
| Enterprise value to operating income (×) | Not meaningful |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 7.3 |
| Free-cash-flow yield (%) | Not meaningful |
Not meaningful: a bank's or insurer's cash and investments back its deposits and policies.
Not meaningful: a bank's or insurer's operating cash flow moves with its deposits, loans and policy reserves, so it is not cash free for its owners.
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 14.9% of shares outstanding sold short, 9.7 days of average trading to cover, +2.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $330K |
| 12 monthsfrom | $0 | $32.1M |
The thesis
Lemonade's shares are more likely to lag the S&P 500 than lead it over the next three months. The company kept its first positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) quarter on track for Q4 2026, but a 65% gross loss ratio and a new registration statement that allows share sales weigh against it. The investor day on 17 November 2026 and the Q4 2026 results settle it.
The Q3 report on 5 November 2026 beat on revenue and held the profit guide. Revenue was $336.1 million, up 73% year on year, against the company's own guide of $323–326 million. The adjusted EBITDA loss was $20.4 million, inside the guided $20–23 million loss. In-force premium (the annualised premium on active policies) reached about $1.55 billion, up 34% (Q3 2026 shareholder letter, Form 8-K exhibit).
Lemonade raised FY2026 revenue guidance to $1,231–1,235 million from $1,214–1,220 million. It left the FY2026 adjusted EBITDA loss guide at $47–51 million and guided Q4 adjusted EBITDA to positive $5–9 million. It expects FY2027 to be its first full year of positive adjusted EBITDA, with no dollar figure yet.
The price reflects a company whose growth is accepted and whose profit is doubted: the shares closed at $42.96 on 12 November 2026, 57.0% below the 52-week intraday high of $99.90 set on 22 January 2026, even after the revenue beat. The rating is Low because the Q4 target was reaffirmed rather than raised, loss ratios moved the wrong way, and analyst targets kept falling after the report.
Bullish and bearish views on Lemonade, Inc.
The bull case on Lemonade, Inc. (LMND), in brief: revenue is running ahead of guidance. The bear case: the loss ratio worsened.
Bull case
- Revenue is running ahead of guidance. Q3 revenue of $336.1 million beat the company's $323–326 million guide, and FY2026 revenue guidance rose to $1,231–1,235 million (shareholder letter, 5 November 2026).
- The Q4 profit target held. The letter guides Q4 2026 adjusted EBITDA to positive $5–9 million, the first such quarter, and calls FY2027 the first full positive year (5 November 2026).
- Losses are narrowing year on year. The Q3 adjusted EBITDA loss of $20.4 million compares with $25.6 million in Q3 2025 (shareholder letter, 5 November 2026).
- Cash covers the gap to profit. Cash, cash equivalents and investments were $1,179 million at 30 September 2026 (shareholder letter).
- Investor day can reset expectations. Lemonade confirmed on 11 November 2026 that its third investor day runs on 17 November 2026 at 9:00 am ET in New York City; the 5 November 2026 letter points to that event for more detail on the FY2027 path.
- Most targets sit above the price. Truist kept Buy with a $60 target and Citizens kept Market Outperform with a $75 target on 6 November 2026 (company news), against the $42.96 close on 12 November 2026.
Bear case
- The loss ratio worsened. The Q3 gross loss ratio was 65% (63% excluding catastrophes), against 60% in Q2, a quarter that management said included about 7 points of favorable prior-period development (shareholder letter 5 November 2026; Oppenheimer conference remarks 12 August 2026).
- Pet and Europe are the weak lines. The Q3 pet gross loss ratio was 75% and the Europe gross loss ratio was 104% (shareholder letter, 5 November 2026). StockStory's summary of the call links the unchanged Q4 profit guide to those rising loss ratios.
- Share issuance is now possible. Lemonade filed an automatic Form S-3 registration on 6 November 2026 covering common stock, preferred stock, debt, warrants and units, with no size stated; its plan of distribution includes at-the-market sales (SEC EDGAR).
- Targets kept falling after the report. Keefe, Bruyette & Woods kept Market Perform and cut its target to $45 on 9 November 2026, after Truist, Citizens and Piper Sandler (Neutral, $47) lowered targets on 6 November 2026 (company news).
- One quarter carries the profit milestone. Guidance implies a swing from a $20.4 million adjusted EBITDA loss in Q3 to positive $5–9 million in Q4, with the Atlantic hurricane season running to 30 November 2026.
- Losses are larger after share-based pay. The Q3 net loss was $43.7 million, or $0.56 per share, and the company guides $93 million of stock-based compensation for FY2026 (shareholder letter, 5 November 2026).
- Executives sold near $54. SEC Form 4 filings show open-market sales on 3 September 2026 by the chief financial officer (1,893 shares at $54.63) and the chief business officer (1,040 shares at $54.63), and by the chief insurance officer under a Rule 10b5-1 plan (3,108 shares at an average $54.50).
Price setup
The shares closed at $42.96 on 12 November 2026, up from the 52-week closing low of $39.28 on 10 November 2026. The report-day close on 5 November 2026 was $41.48, and the shares spent 6 November 2026 through 10 November 2026 between $39.28 and $39.97 before recovering on 11 November 2026 and 12 November 2026.
Both trend lines sit above the price. The 50-day moving average was $45.74 and the 200-day moving average was $56.36 as of 12 November 2026 (adjusted daily closes). The shares are down 18.4% over three months from $52.64 on 14 August 2026.
The two-session rebound came with no new company results; the only company news on 11 November 2026 was the investor day confirmation. The rebound has not yet retaken the 50-day average. A close back above that average and the mid-$40s range the shares held from mid-September until the Q3 report would be the first sign that the market is pricing the Q4 milestone as likely.
Catalysts ahead
- 17 November 2026: Lemonade investor day, 9:00 am ET, New York City. Shows whether management puts a figure on FY2027 adjusted EBITDA and a plan for the 75% pet and 104% Europe loss ratios; also the first forum after the S-3 registration.
- 30 November 2026: End of the Atlantic hurricane season. Closes the main catastrophe window for Q4 2026, the quarter guided to the first positive adjusted EBITDA, with more risk retained after the July reinsurance renewal.
- ~February 2027 (est.): Q4 2026 results. Shows whether the first positive adjusted EBITDA quarter of $5–9 million was reached and whether the gross loss ratio came down from 65%.
What would change the view
A daily close above $46.35, over the 50-day moving average and the mid-$40s range held from mid-September to the Q3 report, which would show the shares leading the S&P 500; or a Q4 2026 adjusted EBITDA guide raised above the $9 million top of the range.
What it trades with
Lemonade trades as a high-growth, loss-making insurance technology stock. Its results depend on loss ratios, catastrophe events and reinsurance terms. Hurricane and storm losses in Q4 link it to other property insurers, while its share moves have also tracked unprofitable growth stocks and interest-rate expectations. The 1 July 2026 reinsurance renewal cut the share of premium ceded to reinsurers to about 18% from about 20%, so catastrophe losses now pass through to results more fully.
The evidence, claim by claim (8)
- Q3 2026 revenue was $336.1 million, up 73% year on year; adjusted EBITDA loss was $20.4 million; in-force premium was about $1.55 billion, up 34%. Q3 2026 shareholder letter, Form 8-K exhibit (SEC EDGAR) · as of
- Q4 2026 guidance: revenue $342–346 million and adjusted EBITDA of positive $5–9 million; FY2026 revenue raised to $1,231–1,235 million; FY2026 adjusted EBITDA loss $47–51 million. Q3 2026 shareholder letter, Form 8-K exhibit (SEC EDGAR) · as of
- Q3 2026 gross loss ratio was 65% (63% excluding catastrophes); pet gross loss ratio 75%; Europe gross loss ratio 104%. Q3 2026 shareholder letter, Form 8-K exhibit (SEC EDGAR) · as of
- Cash, cash equivalents and investments were $1,179 million at 30 September 2026. Q3 2026 shareholder letter, Form 8-K exhibit (SEC EDGAR) · as of
- Lemonade filed an automatic Form S-3 registration statement covering common stock, preferred stock, debt securities, warrants, purchase contracts and units, with no size stated. Form S-3ASR (SEC EDGAR) · as of
- Keefe, Bruyette & Woods kept a Market Perform rating on Lemonade and lowered its price target to $45. Company news, 9 November 2026 · as of
- Truist kept Buy with a $60 target, Citizens kept Market Outperform with a $75 target, and Piper Sandler kept Neutral with a $47 target, each lowered. Company news, 6 November 2026 · as of
- Lemonade's third investor day is scheduled for 17 November 2026 at 9:00 am ET in New York City. Lemonade investor relations page; company announcement 11 November 2026 · as of
Sources
- SEC EDGAR
- Lemonade, Inc. - Form S-3ASR · sec.gov ·
- lemonade.com
- StockStory
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