Since its initial public offering last July, Lemonade (NYSE: LMND) stock has taken investors for a wild ride. After closing at a high of $183 in January, it subsequently lost more than half of its value and bottomed out at $87 per share in early March. Since then, the share price has climbed back over $100, but it’s still down 40% from its 52-week high.

It never feels good to lose money, but this volatility is to be expected with a disruptive growth company like Lemonade. Rather than sell out of fear, investors should take this opportunity to buy a few shares while they’re on sale.

Lemonade collects far more data than a traditional insurance company, and it uses that data to power the artificial intelligence that drives its business. That gives the company a big advantage.

For example, Lemonade uses AI chatbots to sell insurance and process claims, which means the company needs fewer agents and adjusters (i.e. the people who sell policies and handle claims for traditional insurance companies). In fact, Lemonade has just one employee per 1,700 customers, while its rivals typically require one employee per 150 to 450 customers.

But the AI chatbots are more than just a customer engagement gimmick. They leverage vast amounts of data to quantify risk when pricing policies and paying claims. Lemonade believes this will lead to more precise underwriting and fraud detection over time, and those advantages should translate into a lower loss ratio (the percentage of premiums paid out in claims).

So far, this strategy is working. Lemonade’s loss ratio has dropped substantially in recent years. Moreover, at 71% in 2020, its loss ratio is below the industry average in the property and casualty insurance market. That’s encouraging for such a young company.

Ultimately, as its business scales, Lemonade’s data-driven model should make it more efficient (and more profitable) than the competition.

Lemonade’s digital strategy also has another benefit: It’s more customer-friendly. The AI chatbots make it possible for customers to purchase insurance in just two minutes, while allowing the company to pay claims in as little as three seconds. Moreover, because this automation means Lemonade incurs fewer expenses, its prices are often lower than those of its rivals.

Not surprisingly, Lemonade’s focus on providing a friendly user experience has helped it add new customers quickly. In 2020, just four years after the company was founded, it surpassed one million customers. To put that in perspective, Lemonade hit that milestone five to 10 times faster than today’s market-leading incumbents.

Going forward, as Lemonade continues to add new customers and collect even more data, its AI algorithms should become increasingly intelligent, which should mean better underwriting and fraud detection, more effective marketing, better prices, and happier customers over time.

This creates a flywheel effect that will help Lemonade gain ground in the $5 trillion insurance market.

Lemonade’s growth strategy focuses on four key objectives: adding new customers, upselling existing customers, launching new products, and expanding into new geographies.

When Lemonade went public last year, it sold only property and casualty insurance products (renters, homeowners, and condo policies) in 27 states in the U.S., along with Germany and the Netherlands. Since that time, the company has expanded into France, added pet insurance and term life insurance to its portfolio, and now offers at least one product in all 50 states.

What’s more, during Lemonade’s most recent earnings call, COO Shai Wininger told investors the company is already working on its next product. Though he didn’t provide specific details, Wininger did say it could be “the most significant launch” the company has ever done.

Finally, in the fourth-quarter shareholder letter, management indicated that the sequential growth rate of customers with multiple policies was five times greater than that of customers with a single policy. In other words, Lemonade is effectively upselling existing customers, and that trend should intensify as the company continues to launch new insurance products.

The bottom line is this: Lemonade’s growth strategy is working on all fronts. As a result, the company’s ability to monetize each customer is improving.

Investors should remember that Lemonade is still a tiny business in a highly competitive industry. Compared to titanic rivals like Berkshire Hathaway (which trades at just over two times sales), Lemonade’s valuation of 61 times sales is absurdly pricey.

Even so, Lemonade has the potential to disrupt a massive market, and many disruptors are labeled as overvalued until all the pieces click into place. That’s why buying a few shares of Lemonade today could make you look like a genius a decade from now.