Lemonade (LMND) introduces new insurance policy for self-driving cars, starting with Tesla’s (TSLA) Full Self-Driving (FSD) system. Stock prices for LMND and TSLA surge on the news, with LMND experiencing a 13% increase on Jan. 22. Lemonade plans to cut per-mile rates by 50% with FSD, citing reduced accident rates.

Investors see potential in the insurance, data, and AI convergence as Lemonade aims to leverage Tesla’s car data for usage-based pricing. Lemonade, valued at $7 billion, is a tech-driven insurer using AI and automation. LMND stock has surged 181% in the past year, outperforming the S&P 500 Index.

Despite not being profitable, LMND stock remains highly valued at 10.35 times sales and over 13 times book value. Lemonade’s recent quarterly results show strong growth, with In Force Premium reaching $1.16 billion in Q3 and gross profits doubling. The company’s AI models are proving effective, with a declining loss ratio and increased margins.

Wall Street maintains a cautious outlook on LMND stock, with a consensus “Hold” rating and a mean target price of $63.40. Analysts warn of downside potential if Lemonade fails to meet expectations. While the partnership with Tesla is promising, profitability remains a concern, with varying price targets for LMND stock.

Read more at Yahoo Finance: Lemonade Will Insure Tesla’s Self-Driving Cars. Does That Make LMND a Robotaxi Stock to Buy?