LegalZoom.com (NASDAQ:LZ) Shares Gap Down on Analyst Downgrade

LegalZoom.com, Inc. (NASDAQ:LZ) shares gapped down before the market opened on Thursday after William Blair downgraded the stock from an outperform rating to a market perform rating. The stock had previously closed at $8.10, but opened at $6.13. LegalZoom.com shares last traded at $5.6030, with a volume of 1,390,351 shares trading hands.

Other equities research analysts also recently issued reports about the company. UBS Group cut their price target on LegalZoom.com from $8.00 to $7.00 and set a “neutral” rating for the company in a research note on Thursday, May 7th. JPMorgan Chase & Co. restated a “neutral” rating and issued a $7.00 price objective (down from $8.00) on shares of LegalZoom.com in a report on Thursday. Weiss Ratings reiterated a “sell (d+)” rating on shares of LegalZoom.com in a research note on Thursday, July 2nd. Citigroup decreased their target price on shares of LegalZoom.com from $8.50 to $7.50 and set a “neutral” rating for the company in a research report on Friday, May 22nd. Finally, Wall Street Zen upgraded shares of LegalZoom.com from a “hold” rating to a “buy” rating in a report on Tuesday, July 28th. One research analyst has rated the stock with a Buy rating, five have assigned a Hold rating and three have given a Sell rating to the company. According to MarketBeat.com, the company has an average rating of “Reduce” and an average price target of $8.08.

Insider Activity

In other news, CFO Noel Bertram Watson sold 15,000 shares of the firm’s stock in a transaction that occurred on Monday, May 18th. The shares were sold at an average price of $6.45, for a total transaction of $96,750.00. Following the completion of the sale, the chief financial officer owned 2,041,847 shares of the company’s stock, valued at approximately $13,169,913.15. This trade represents a 0.73% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Nicole Miller sold 19,199 shares of LegalZoom.com stock in a transaction that occurred on Tuesday, May 19th. The shares were sold at an average price of $6.58, for a total transaction of $126,329.42. Following the completion of the transaction, the insider owned 1,119,222 shares of the company’s stock, valued at $7,364,480.76. This trade represents a 1.69% decrease in their position. The disclosure for this sale is available in the SEC filing. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. 7.40% of the stock is owned by corporate insiders.

More LegalZoom.com News

Here are the key news stories impacting LegalZoom.com this week:

• Positive Sentiment: LegalZoom reported second-quarter revenue of $205.3 million, up 7% year over year, while subscription revenue increased 11% to $133.4 million. Adjusted EBITDA reached $45.9 million, above the high end of management’s guidance, and net income rose to $5.2 million. LegalZoom second-quarter financial results
• Positive Sentiment: Earnings of $0.16 per share exceeded the $0.15 consensus estimate, and the company generated $33.7 million in free cash flow. LegalZoom also repurchased $45.5 million of stock during the quarter, has no debt, and retains approximately $80.4 million under its repurchase authorization. LegalZoom beats second-quarter earnings estimates
• Neutral Sentiment: Management maintained its focus on margin discipline and expects full-year 2026 adjusted EBITDA of $190 million to $195 million. However, it said customers are increasingly discovering services through channels other than traditional search, requiring continued investment in channel diversification and human-assisted offerings.
• Negative Sentiment: LegalZoom reduced its 2026 revenue outlook to $795 million-$805 million, below the roughly $822 million analyst consensus. Third-quarter revenue guidance of $192 million-$196 million also trails the $204.4 million consensus, raising concerns about near-term growth. LegalZoom 2026 revenue outlook
• Negative Sentiment: William Blair downgraded LZ from “outperform” to “market perform,” while JPMorgan reaffirmed its “neutral” rating and cut its price target from $8 to $7. The revisions reinforce investor concerns that the lower outlook outweighs the quarterly earnings beat. William Blair downgrades LegalZoom

Hedge Funds Weigh In On LegalZoom.com

A number of institutional investors and hedge funds have recently bought and sold shares of the business. Goldman Sachs Group Inc. lifted its position in shares of LegalZoom.com by 165.3% during the fourth quarter. Goldman Sachs Group Inc. now owns 3,730,487 shares of the company’s stock worth $37,044,000 after purchasing an additional 2,324,481 shares in the last quarter. Boston Partners acquired a new position in LegalZoom.com during the 3rd quarter worth $20,686,000. Bank of America Corp DE boosted its position in LegalZoom.com by 187.4% in the 1st quarter. Bank of America Corp DE now owns 2,509,891 shares of the company’s stock valued at $14,231,000 after buying an additional 1,636,487 shares during the last quarter. Qube Research & Technologies Ltd increased its stake in shares of LegalZoom.com by 180.5% in the 2nd quarter. Qube Research & Technologies Ltd now owns 1,797,252 shares of the company’s stock valued at $16,014,000 after buying an additional 1,156,462 shares during the period. Finally, Norges Bank acquired a new stake in shares of LegalZoom.com in the 4th quarter valued at $10,526,000. Institutional investors and hedge funds own 81.99% of the company’s stock.

LegalZoom.com Price Performance

The firm has a market cap of $967.25 million, a price-to-earnings ratio of 93.63, a price-to-earnings-growth ratio of 1.40 and a beta of 1.28. The firm has a 50 day moving average price of $6.76 and a 200-day moving average price of $6.75.

LegalZoom.com (NASDAQ:LZ) last posted its quarterly earnings results on Wednesday, August 5th. The company reported $0.16 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.15 by $0.01. The business had revenue of $205.29 million for the quarter, compared to analyst estimates of $205.83 million. LegalZoom.com had a return on equity of 11.53% and a net margin of 1.46%.The firm’s revenue was up 6.6% on a year-over-year basis. During the same period last year, the company earned $0.15 EPS. On average, sell-side analysts expect that LegalZoom.com, Inc. will post 0.34 EPS for the current fiscal year.

LegalZoom.com Company Profile

LegalZoom.com, Inc (NASDAQ: LZ) operates as a leading online legal technology company that provides a broad range of legal and business services to individuals, families and small businesses. Through its digital platform, the company offers customized legal documents and filing services, including business formation (LLCs, corporations and nonprofits), estate planning (wills and trusts), intellectual property protection (trademarks and copyrights), and ongoing compliance support. LegalZoom also connects customers with independent attorneys for consultations on matters such as family law, immigration and real estate.

Founded in 2001 by entrepreneurs Brian Lee, Brian P.