My Bullish Thesis

Prediction

This is why I believe Lemonade (LMND) will be worth $280 within 3 years:

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CEO (Daniel Schrieber)

He was a board member at Powermat (a wireless charger manufacturer) and he co-founded Lemonade with Shai Wininger (co-founder of "Fiverr"). He doesn't have a lot of experience but he seems like he'll do fine.

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Who is LMND?

LMND sells pet, renters, homeowner's, and is planning to sell life insurance.

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Insurance Companies are not Well-Liked - Alright you guys, so this is an easy one for me. Lemonade (LMND) is an insurance company. Insurance, if you don't know is a field that a lot of people despise. A lot of people don't go out looking for insurance and only go out looking for it as a consequence of some law requiring them to have it. It is expensive for something that you can't touch. It is boring and confusing. The sad fact of the matter is that the insurance industry is an industry that people do not like and do not trust. Insurance companies have an inherent conflict of interest to deny claims in order to turn a profit. Insurance companies are not well liked because they profit off of denying your claims and write loopholes into your contracts to deny your claims and other types of shady behavior and Lemonade removes all that and pays claims instantly because they removed the inherent conflict of interest within the insurance relationship.

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LMND is Liked - Lemonade's business model differs from that of typical insurance companies in that it keeps a flat 25% fee of a customer's premium while setting aside the remaining 75% to pay claims and purchase reinsurance. Unclaimed premiums go to a nonprofit of the user's choosing in an annual “Giveback.” By charging the flat 25% fee the company has removed the inherent conflict of interest within the insurance customer relationship. Therefore, LMND has no reason to deny your claims and can pay them out instantly (most of the time). See Below. when you make them. This feature might also make users less likely to embellish the amount requested, knowing extra funds go to their favorite cause rather than into the company's bottom line.

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Necessary Business - While there are many different insurance companies to choose from a lot of people only purchase insurance because we are required to do so as a result of a contract being entered into or a law. As a result, there will always be a market for this type of business.

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Donates to Charity - LMND is registered as a public benefit corporation. Their mission is to "transform insurance from a necessary evil into a social good."

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Has Robots - Lemonade uses artificial intelligence to sign up for and make insurance claims. The company is eliminating a lot of paperwork (and jobs) by using artificial intelligence and this also cuts lots of costs.

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LMND Scores High on Customer Satisfaction - Insurance companies that are well-liked are hard to come by.

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The Bear Thesis

Lack of Profitability - This is not really a concern. LMND only IPO'd 6 months ago and in Q2 posted a loss of -$1.77 eps. In Q3 LMND shrunk its loss to approximately -$.59 eps. This trajectory indicates to me that LMND will likely reach profitability in Q4.

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Premiums are More Expensive - This might be the bear's strongest argument. Premium rates change from policy to policy it is actually difficult to tell whether LMND's policies are more expensive and if so by how much. My research has shown that the policies are slightly more expensive, but it appears that you receive a premium product. I ask myself the question, "Why would I pay a premium to an insurance company that is a hassle to deal with?"

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Most of the Time - Generally, insurance companies already take a long time to pay out claims. LMND pays out claims just as quickly if not more quickly than your typically insurance company most of the time by using artificial intelligence.