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

LegalZoom.com, Inc. (NASDAQ:LZ)’s share price 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.

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

Insider Buying and Selling at LegalZoom.com

In other LegalZoom.com news, CFO Noel Bertram Watson sold 15,000 shares of the stock in a transaction 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 sale, the chief financial officer directly owned 2,041,847 shares of the company’s stock, valued at approximately $13,169,913.15. This represents a 0.73% decrease in their ownership of the stock. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available at the SEC website. 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 the firm’s stock in a transaction dated Tuesday, May 19th. The stock was 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 in the company, valued at approximately $7,364,480.76. The trade was a 1.69% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. 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 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

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently bought and sold shares of LZ. Arrowstreet Capital Limited Partnership grew its stake in shares of LegalZoom.com by 20.8% in the third quarter. Arrowstreet Capital Limited Partnership now owns 4,408,170 shares of the company’s stock worth $45,757,000 after purchasing an additional 758,367 shares in the last quarter. Goldman Sachs Group Inc. increased its position in shares of LegalZoom.com by 165.3% during the 4th quarter. Goldman Sachs Group Inc. now owns 3,730,487 shares of the company’s stock valued at $37,044,000 after purchasing an additional 2,324,481 shares during the period. Boston Partners lifted its holdings in LegalZoom.com by 81.0% in the 4th quarter. Boston Partners now owns 3,623,111 shares of the company’s stock valued at $36,054,000 after acquiring an additional 1,621,125 shares during the last quarter. Franklin Resources Inc. raised its holdings in shares of LegalZoom.com by 2.8% in the 3rd quarter. Franklin Resources Inc. now owns 3,327,296 shares of the company’s stock worth $34,537,000 after purchasing an additional 90,599 shares in the last quarter. Finally, Dimensional Fund Advisors LP increased its holdings in shares of LegalZoom.com by 3.0% in the first quarter. Dimensional Fund Advisors LP now owns 3,112,895 shares of the company’s stock valued at $17,650,000 after buying an additional 91,131 shares in the last quarter. 81.99% of the stock is owned by institutional investors and hedge funds.

LegalZoom.com Stock Performance

The firm has a market capitalization of $967.25 million, a P/E 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 two-hundred day moving average price of $6.75.

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