What happened?
Shares of online legal service provider LegalZoom (NASDAQ: LZ) fell 15.4% in the morning session after the company reported third-quarter 2026 financial results and lowered its full-year adjusted EBITDA guidance.
According to a company press release, LegalZoom reported third-quarter revenue of $195.1 million and adjusted EBITDA of $50.0 million. Management reduced its full-year 2026 adjusted EBITDA outlook to a range between $180.0 million and $185.0 million, pointing to a tough customer acquisition environment alongside ongoing corporate investments.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy LegalZoom? Access our full analysis report here, it’s free.
What is the market telling us
LegalZoom’s shares are extremely volatile and have had 30 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 9 months ago when the stock dropped 19.3% on the news that the broader software and data services sector sold off as artificial intelligence firm Anthropic released an automation tool for lawyers. The news appeared to spark worries about how AI could disrupt the software industry. The sell-off was widespread, affecting several other companies in the sector.
LegalZoom is down 37.5% since the beginning of the year, and at $6.00 per share, it is trading 45.1% below its 52-week high of $10.93 from November 2025. Investors who bought $1,000 worth of LegalZoom’s shares 5 years ago would now be looking at only $238.03.
ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention.
AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice.
