Why Lemonade Stock Has Plummeted 22% Today

Shares of Lemonade (NYSE: LMND) cratered on Wednesday, plunging around 22.5% to around $48.15, as investors reacted harshly to the digital insurer’s second-quarter results and disappointing outlook.

The sell-off wiped out weeks of gains and marked one of the stock’s worst single-day drops in recent memory.

Before markets opened, Lemonade reported Q2 revenue of $294.4 million, topping analyst estimates of roughly $291 million and representing 79% year-over-year growth. Gross earned premium rose 32% to about $332.4 million, also beating consensus. Earnings came in at a loss of $0.56 per share, in line with expectations.

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Despite the top-line beat, investors zeroed in on softer guidance. Lemonade’s full-year revenue and gross earned premium targets narrowly topped Wall Street’s forecasts, but its projected in-force premium range of $1.632 billion to $1.639 billion fell short of the more than $1.642 billion analysts had modeled.

The company also reiterated—rather than raised—its target for a $50 million non-GAAP adjusted operating loss for the year, disappointing investors who had hoped for an improved profitability timeline.

The disappointment came against a shaky macro backdrop. Rising oil prices and uncertainty around the Federal Reserve’s next policy moves rattled broader markets Wednesday, with the S&P 500 and Nasdaq Composite both sliding roughly 1%. For a growth stock like Lemonade, which trades on a premium, growth-dependent valuation, anything short of a clear “beat-and-raise” quarter was likely to trigger an outsized reaction.

Lemonade has made real underwriting progress in recent quarters, improving its loss ratio and expanding into new states. But Wednesday’s reaction shows investors remain unwilling to tolerate any cracks in the path to profitability.