Lemonade (LMND) Stock Sells Off as Wall Street Loses Patience on Profits

TLDR

• Lemonade (LMND) stock fell around 10-12% following its Q4 2025 earnings report
• Q4 revenue came in at $228.1 million, with a net loss of $0.29 per share
• Full-year 2025 revenue hit $737.9 million, with losses narrowing year-over-year
• Piper Sandler cut its price target from $85 to $65, maintaining a Neutral rating
• 2026 guidance projects $1.187–$1.192 billion in revenue but an adjusted EBITDA loss of $48–$52 million

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Lemonade (LMND) stock dropped roughly 10-12% in the days following its Q4 2025 earnings release on February 19, 2026.

The selloff came even as the company posted its best quarterly results yet.

Q4 revenue came in at $228.1 million, up 53% year-over-year. The net loss narrowed to $0.29 per share, and adjusted EBITDA loss tightened to around $5 million for the quarter.

Lemonade, Inc., LMND

In-force premium rose to approximately $1.24 billion, another record for the company.

Full-year 2025 revenue reached $737.9 million. The full-year net loss was $165.5 million, smaller than the prior year.

Management also highlighted record gross profit and improving cash flow as signs the model is maturing.

Wall Street Turns Cautious

Piper Sandler moved quickly after the print, cutting its price target from $85 to $65 while holding a Neutral rating.

The firm pointed to Lemonade’s repeated failure to hit its adjusted EBITDA targets as the core issue. Even with better underwriting, the company keeps missing its own profitability timelines.

Piper acknowledged its concerns may be “overly simplistic,” noting Lemonade is performing well in direct-to-consumer personal lines insurance. But investor patience is wearing thin.

The average Wall Street price target now sits at $65.11, implying about 14% upside from Friday’s close of $57.31. Of 11 analysts, three rate it Buy or higher, five Hold, and three Sell.

2026 Guidance Disappoints

For 2026, Lemonade guided to revenue of $1.187–$1.192 billion. That’s strong top-line growth.

But the company also projected a full-year adjusted EBITDA loss of $48–$52 million.

Q1 2026 alone is expected to carry an adjusted EBITDA loss of $22–$25 million.

The company does expect to post a positive adjusted EBITDA quarter in Q4 2026, with full-year EBITDA profitability targeted for 2027.

That timeline hasn’t changed — and that’s part of the problem. Analysts and investors had hoped the goalposts might move forward.

The gap between revenue momentum and near-term profit delivery is what’s driving the reset in sentiment.

AI Progress Continues

Lemonade did have some good news on the product front. The company launched an AI-enabled autonomous car insurance product during the quarter.

Its AI operating system, Blender, is now helping claims adjusters handle three times the volume they could previously manage.

Marketing spend has more than tripled, driven by AI-powered improvements in pricing and customer segmentation.

Long-term, analysts project revenue reaching $1.8 billion and earnings of $201.4 million by 2028. More bullish estimates had pegged revenue as high as $2.0 billion by that year.

Piper Sandler’s current $65 target implies 13.4% upside from the most recent close of $57.31.

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