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Why Is LegalZoom (LZ) Stock Rocketing Higher Today

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What Happened?

Shares of online legal service provider LegalZoom (NASDAQ: LZ) jumped 27.1% in the afternoon session after the company reported strong first quarter 2025 results which beat analysts' revenue, EPS, and EBITDA expectations, and also saw subscription units outperform Wall Street's estimates. Transaction revenue, by contrast, was flat, held back by a drop in business formations and softer average order values. Overall, we think this was a solid quarter with some key metrics above expectations.

Is now the time to buy LegalZoom? Access our full analysis report here, it’s free.

What The Market Is Telling Us

LegalZoom’s shares are quite volatile and have had 15 moves greater than 5% over the last year. But moves this big are rare even for LegalZoom and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 10 months ago when the stock dropped 31.6% on the news that the company announced a leadership change and lowered its full-year revenue and free cash flow guidance. LegalZoom announced in a press release that the current Chairman of the Board of Directors, Jeffrey Stibel, had been named CEO, effective immediately. This followed the announcement of the departure of current Chief Executive Officer Dan Wernikoff. 

Separately, the company lowered FY'24 revenue expectation to a range of $675 million to $685 million (vs. previous guidance of $710m at the midpoint) and its free cash flow to a range of $75 million to $85 million (vs. prior guidance of $90m at the midpoint). 

Following the announcement, multiple Wall Street analysts downgraded the stock's rating. JMP Securities lowered the stock's rating from Market Outperform (Buy) to Market Perform (Hold), adding, "Investors are likely to take this as a signal of newfound, operational troubles at the company. Since initiating coverage in February, we have been strongly optimistic about LegalZoom's (LZ) continued transition to a subscription-dominant platform. Our thesis — which expected improved results would bear fruit in 2H24 and 2025 — appears compromised."

LegalZoom is up 21.3% since the beginning of the year, but at $9.17 per share, it is still trading 10.6% below its 52-week high of $10.26 from March 2025. Investors who bought $1,000 worth of LegalZoom’s shares at the IPO in June 2021 would now be looking at an investment worth $242.33.

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