Assessing Lemonade’s Valuation As Tesla FSD Insurance Launch Highlights Its AI-Led Growth Story

Why Lemonade’s Tesla FSD insurance launch matters

Lemonade (LMND) has launched Lemonade Autonomous Car insurance, a product built for self-driving vehicles that initially targets Tesla Full Self-Driving users with roughly 50% lower per-mile rates when FSD is engaged.

See our latest analysis for Lemonade.

The Tesla FSD insurance launch lands after a strong run, with a 90 day share price return of 40.93% and a very large 3 year total shareholder return of 372.39%. This comes even as the 7 day share price return of 6.99% and 1 day share price return of 4.98% show some recent cooling at a last close of US$86.73, while a 5 year total shareholder return of 40.11% remains in negative territory.

If this kind of AI led insurance story has your attention, it could be a good moment to scan other high growth tech and AI stocks that are reshaping how technology and finance come together.

After a very strong 1-year total return of 160.92% and a 3-year return of roughly 3.7x, yet with shares trading above the average analyst price target, is Lemonade still mispriced, or is the market already banking on future growth?

Most Popular Narrative: 29.2% Overvalued

With Lemonade last closing at $86.73 and the most followed narrative pointing to a fair value of about $67.11, there is a clear gap between sentiment and that framework.

The analysts have a consensus price target of $45.125 for Lemonade based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $60.0, and the most bearish reporting a price target of just $31.0.

Read the complete narrative.

Curious why a company still reporting losses is paired with ambitious revenue growth, sharply higher margin assumptions, and a premium future earnings multiple? The tension between those inputs and the fair value estimate is exactly what this narrative unpacks in detail.

Result: Fair Value of $67.11 (OVERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, there is still a real chance that faster than expected AI driven efficiency gains or stronger than expected international growth could challenge this overvalued view.

Find out about the key risks to this Lemonade narrative.

Build Your Own Lemonade Narrative

If you are not on board with this view or prefer to test the numbers yourself, you can build a fresh take in minutes with Do it your way.

A great starting point for your Lemonade research is our analysis highlighting 1 key reward and 2 important warning signs that could impact your investment decision.

Looking for more investment ideas?

Do not stop at a single stock story, broaden your watchlist with targeted ideas that match your style before the next wave of opportunities passes you by.

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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