Lemonade’s CFO Endorsed the Stock—Since Then, It’s Plunged 20%

"I’ve never been as confident in the future of the company I’m at as I am now," said Tim Bixby, CFO of digital insurance firm Lemonade Lemonade -7.19%  , a few months ago. Bixby made this statement during a well-promoted investor conference that the company aggressively hyped in the weeks leading up to it. At its peak, he even explained why the stock should reach $90. But instead of approaching that astronomical target—more than doubling at the time—the stock has since dropped nearly 21%.

At the time, we were critical of what we saw as a misuse of the investor conference platform, especially discussing the stock price without specifying a timeframe. The company did present concrete forecasts, including a transition to positive EBITDA in 2026 and profitability in 2027. However, it also threw out numerous figures without clarifying when they would materialize. Besides the stock price projection, the CFO also declared that premiums (IFP) would skyrocket tenfold to $10 billion—but without providing any timeline.

This approach is, at best, unserious and may even warrant regulatory scrutiny. The company teased the event with hints and teasers on social media. Executives even gave interviews, promising to deliver significant forecasts. While those forecasts were indeed provided, they were accompanied by a slew of unsubstantiated figures—some of which directly influenced the stock price.

• למונייד הישראלית תנפיק לפי שווי של 1.35 מיליארד שקל
• כל מה שצריך לדעת על למונייד הישראלית שרוצה לשנות את עולם הביטוח

When the CFO—the person most familiar with the company’s financials—says the stock should double, investors listen. Lemonade’s executives know this, and like many others in the market, they sometimes use their position irresponsibly. Often, it’s not out of malice but frustration that investors don’t see what insiders do. Still, statements like these are best avoided—especially by a company aspiring to become a major, established insurer.

By the way, while the stock initially surged about 15% following the investor conference, those gains quickly evaporated, and it now trades 20% lower than before the event. To be fair, Lemonade did face an unexpected challenge: the massive wildfires in Los Angeles, one of its key markets, which contributed to the stock’s decline. However, the company has yet to provide any evidence that it deserves such a lofty valuation.

A Strong Quarter, But Weaker Guidance

Lemonade beat analyst expectations in Q4, reporting $149 million in revenue alongside a loss of $0.42 per share. However, its guidance for the upcoming quarter and full year disappointed, partly due to the January wildfires in Los Angeles.

The company’s Q4 revenue came in at $149 million, marking a 29% increase year-over-year and surpassing analysts' expectations of $145 million. The revenue growth was driven by a 26% jump in premiums (IFP) to a total of $944 million.

עוד תכניות

Bottom line, Lemonade posted an adjusted loss of $0.42 per share—an improvement over the $0.61 per-share loss a year ago and better than analysts’ projections of a $0.60 loss. That said, the company’s EBITDA remained negative at -$24 million.

Lemonade ended Q4 with a positive cash flow of $27 million, marking the first time it has closed a year with a positive cash flow ($48 million).

Looking ahead, the company expects Q1 revenue between $143 million and $145 million—below analysts’ estimates of $151.9 million. For the full year 2025, it projects revenue of $655 million to $657 million, again falling short of the consensus forecast of $663.3 million. The company noted that these projections account for the impact of the Los Angeles wildfires, which it estimates resulted in a $45 million hit to gross profit/loss and a $20 million EBITDA impact.

Shai Wininger, Lemonade’s Co-Founder and President: "This has been the best year since the company’s inception. We ended the year with 2.5 million customers, nearly $1 billion in premiums, positive cash flow, unprecedented underwriting results, and a doubling of gross profit from last year. Frankly, I can’t think of a single metric that hasn’t improved significantly over the past year. These outstanding results stem from years of investment in automation and AI. These systems now operate entire segments of the business without human intervention, leading to unparalleled efficiency, competitive pricing, and instant, top-tier service for our customers."