AI-powered insurance company Lemonade Inc. (NYSE: LMND) has quietly put together an impressive year, with the stock surging more than 60% year-to-date.
As it nears its upcoming earnings report, the stock is also forming what appears to be a bullish consolidation pattern, closing Thursday just 5.8% below its 52-week high.
With strong momentum, a potentially explosive technical setup, and high short interest, investors may be asking whether now’s the time to keep LMND firmly on their radar heading into year's end.
Reinventing Insurance With AI
Lemonade has built its brand around simplicity, automation, and transparency—three qualities that have long been lacking in traditional insurance. The company offers renters, homeowners, pet, auto, life, and landlord insurance across the U.S., Europe, and the U.K., but what truly sets it apart is its AI-driven platform.
Instead of relying on traditional underwriters and brokers, Lemonade uses machine learning algorithms to automate everything from pricing and risk assessment to handling claims and customer service. That technology allows users to get insured in minutes and receive claims payouts in seconds.
The big question remains whether AI can consistently outperform legacy insurers in pricing risk. It’s a complex challenge that even established players struggle to master. Still, Lemonade’s ability to scale operations and grow its customer base rapidly suggests its model is gaining traction. For now, it remains a pure growth story that is still in the red but expanding aggressively to capture market share.
Strong Revenue Growth, But Profitability Still Elusive
In its most recent quarter, Q2 2025, Lemonade reported a loss of 60 cents per share, easily beating consensus estimates of an 81-cent loss per share.
Revenue came in at $164.1 million, up 34.5% year-over-year and above Wall Street expectations. That’s been the recurring theme for Lemonade: strong top-line growth that consistently outpaces analyst forecasts.
Looking ahead, the company is set to report Q3 2025 earnings on Nov. 5, with analysts expecting a 72-cent loss per share and revenue in the $183–$186 million range. Investors will want to pay close attention to see if Lemonade can continue to narrow its losses while maintaining robust growth. Any upside surprise could spark a breakout, given the stock’s current technical positioning…and immense short interest.
A Bullish Setup With Short Interest as Potential Fuel
From a technical standpoint, LMND has spent the past three months consolidating between $50 and $62, with $62 marking a key resistance level. The stock is trading well above all major moving averages, a sign that the overall trend remains bullish.
The setup becomes even more interesting when sentiment is taken into account. As of Oct. 15, Lemonade’s short interest stood at 25.75%, equivalent to about 15.6 million shares sold short. With average daily volume near 2.4 million shares, that’s a significant overhang but also potential fuel for a short squeeze.
If the company delivers better-than-expected sales or a narrower loss in its following report, shorts could be forced to cover, driving a sharp upside move. A confirmed breakout above $62 could trigger momentum traders to pile in, amplifying any rally.
Bears Have a Case, But Price Action Favors the Bulls
There’s no shortage of skeptics. Fundamentally, Lemonade remains unprofitable, and its valuation in relation to its earnings potential is difficult to justify. Analysts maintain a Reduce consensus rating on the stock, reflecting caution around its long-term profitability and execution risk.
But the price action tells another story. Despite bearish sentiment and heavy short positioning, LMND continues to hold near its highs, a sign of strong relative strength. In a market that’s rewarding stocks showing resilience and clear uptrends, Lemonade fits the bill.
For now, the stock is likely better suited to traders than to long-term investors. Those seeking exposure to high-growth, high-risk names with near-term catalysts may find LMND’s setup appealing. But for fundamental investors, confirmation will likely come only after the company proves it can turn scale into profitability.
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The article "Is Lemonade Stock Set for a Big Squeeze After Earnings?" first appeared on MarketBeat.
