Value
6.8/10data confidence 33%| Component | Sub-score |
|---|---|
| P/S | 7.9 |
| Analyst target | 6.0 |
LMND · Why this verdict
Why Lemonade (LMND) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Lemonade is a high-growth insurer (79% YoY growth, a consistent earnings-beat record) whose losses are narrowing, but quality is below average and the stock is 55% off its high with a confirmed downtrend. The setup offers 13.2% upside to the analyst target against 8.6% downside.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Growth is exceptional: the data shows 79% year-over-year growth, with revenue of $294.4M in the June 2026 quarter versus $164.1M a year earlier. Growth breakdown | Quarterly revenue should keep growing above 40% year over year. | →Stable |
| CounterHypergrowth in insurance can come from loosening underwriting, and growth at this pace may not translate into profits. | ||
Reported losses are narrowing in line with or better than estimates: 3 beats and 0 misses in the last four quarters, with an average surprise of about 17.8%. Earnings | Loss per share should keep coming in at or better than estimates, ahead of the November 5 report. | →Stable |
| CounterBeating a loss estimate is a low bar; the latest quarter was merely in line at -0.56, and the company is still unprofitable. | ||
Business quality is below average at 3.2 out of 10, with return on equity, return on assets and operating margin all scoring zero, though cash flow is positive (FCF margin 10%). Quality breakdown | Quality should improve only if operating margin turns toward break-even over the next 12 months. | →Stable |
| CounterThe company is positive on free cash flow, has a moderate moat score (6.5) and a Piotroski F-Score score of 6.7, which suggests quality is improving faster than the headline score shows. | ||
Price is in a confirmed downtrend, below the 200-day average with a 30-day slope of -7.3% and a drawdown of 55%, while rising on-balance volume hints at accumulation. Momentum breakdown | The price should reclaim its 200-day average with volume accumulation continuing for the recovery setup to play out. | ↑Improving |
| CounterA death cross, 16% short interest and 92% implied volatility point to a stock that can keep falling around earnings. | ||
The company carries a high-severity concentration risk: it relies on a sole provider of third-party data centers. Bear case | The dependency should persist; any disruption or repricing from that provider would directly affect operations. | →Stable |
| CounterCloud infrastructure is commoditized and workloads can generally be migrated, limiting the practical risk. | ||
Growth is exceptional: the data shows 79% year-over-year growth, with revenue of $294.4M in the June 2026 quarter versus $164.1M a year earlier.
→StableGrowth breakdown
- Expectation
- Quarterly revenue should keep growing above 40% year over year.
CounterHypergrowth in insurance can come from loosening underwriting, and growth at this pace may not translate into profits.
Reported losses are narrowing in line with or better than estimates: 3 beats and 0 misses in the last four quarters, with an average surprise of about 17.8%.
→StableEarnings
- Expectation
- Loss per share should keep coming in at or better than estimates, ahead of the November 5 report.
CounterBeating a loss estimate is a low bar; the latest quarter was merely in line at -0.56, and the company is still unprofitable.
Business quality is below average at 3.2 out of 10, with return on equity, return on assets and operating margin all scoring zero, though cash flow is positive (FCF margin 10%).
→StableQuality breakdown
- Expectation
- Quality should improve only if operating margin turns toward break-even over the next 12 months.
CounterThe company is positive on free cash flow, has a moderate moat score (6.5) and a Piotroski F-Score score of 6.7, which suggests quality is improving faster than the headline score shows.
Price is in a confirmed downtrend, below the 200-day average with a 30-day slope of -7.3% and a drawdown of 55%, while rising on-balance volume hints at accumulation.
↑ImprovingMomentum breakdown
- Expectation
- The price should reclaim its 200-day average with volume accumulation continuing for the recovery setup to play out.
CounterA death cross, 16% short interest and 92% implied volatility point to a stock that can keep falling around earnings.
The company carries a high-severity concentration risk: it relies on a sole provider of third-party data centers.
→StableBear case
- Expectation
- The dependency should persist; any disruption or repricing from that provider would directly affect operations.
CounterCloud infrastructure is commoditized and workloads can generally be migrated, limiting the practical risk.
Per-dimension breakdown
Quality
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 6.3 |
| Op margin | 0.0 |
| Net margin | 0.0 |
| Current ratio | 4.6 |
| FCF quality | 4.9 |
| Moat | 6.5 |
| Piotroski F | 6.7 |
- ▸FCF-positive but moderate margins (FCF margin 10%, FCF yield 2.7%)
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 79% YoY
Momentum
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 5.4 |
| MA position | 1.0 |
| Volume | 2.2 |
- ▸Below 200-MA, MA slope -7.6%/30d — confirmed downtrend
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.0 |
| Price target | 8.5 |
- ▸LLM news sentiment: +0.40 (n=1)
- ▸Analyst upside: 29%
Insider
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 6.5 |
| notable moves | 7.0 |
- ▸Modest insider selling — $907,665 (0.026% of mkt cap)
Peer rank
2.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 1.0 |
| quality rank | 0.0 |
| growth rank | 9.8 |
- ▸Industry growth leader
Technical
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.4 |
| support resistance | 5.4 |
| 52w position | 0.0 |
Risk (lower is worse)
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 1.9 |
| days to cover | 0.3 |
| volatility | 1.6 |
| put call | 7.4 |
| implied vol | 0.0 |
| beta | 3.8 |
| debt equity | 8.2 |
| news risk | 6.0 |
- ▸High short interest justified: 16%
- ▸High IV: 105%
- ▸Concentration risks: 1 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 6 days
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- MOMENTUM:4.6>=4.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- ASYMMETRY:1.4<1.5@spot
- DEATH_CROSS:HARD_BLOCK
- EARNINGS_PROXIMITY:6d<=7d
Warning (1)
- MOMENTUM:4.6<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
1.39
Upside
+12.1%
Downside
8.7%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 44
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -55% (>40% off 52w high), Binary industry: Insurance - Property & Casualty
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's 1.4<1.5@spot outcome against Growth at 10.0 and asymmetric R:R of 1.39.
The strongest dimensions are Growth at 10.0, Catalyst at 7.0, and Value at 6.8; the weakest are Peer rank at 2.8, Quality at 3.2, and Risk (lower is worse) at 3.6. The V9 engine flagged 3 failed gates with 1 warning, producing an asymmetric reward-to-risk of 1.39 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Rapid Revenue Growth
Trip ifQuarterly revenue growth falls below 40% YoY for 2 consecutive quarters.
- P2Consistent Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P3Below Average Quality
Trip ifOverall quality score stays below 3.0 from the current 3.2 after the next two quarterly reports.
- P4Downtrend With Accumulation
Trip ifPrice falls below the $41.78 stop level, more than 7% below the current $44.92.
- P5Single Supplier Concentration
Trip ifThe number of high-severity concentration risks rises to more than 1 from the current 1.