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Investing.com - JPMorgan downgraded Riskified Ltd. (NYSE:RSKD) from Neutral to Underweight on Wednesday, citing concerns about the company’s growth trajectory compared to broader e-commerce trends. The company, currently trading at $4.46, has seen its stock decline 14% in the past week, though InvestingPro analysis indicates the stock is currently undervalued.
The financial services firm noted that Riskified’s revenue and volume growth in the low-to-mid single digits has lagged behind the high single-digit growth of the broader e-commerce sector and significantly trailed discretionary spending peers like Shopify (NASDAQ:SHOP) and Affirm, which have grown over 30%. Recent data from InvestingPro shows Riskified’s revenue growth at 8%, with analysts expecting improved profitability in the coming year. Get access to 8 more exclusive InvestingPro Tips and comprehensive analysis for RSKD.
JPMorgan attributed Riskified’s underperformance to a large client loss in the fourth quarter of 2024 and weakness in luxury spending and the tickets and travel segments.
The downgrade also reflected skepticism about Riskified’s ability to achieve its adjusted EBITDA margin targets of 15-20% by 2026, with JPMorgan forecasting only a 10% margin for that period.
While acknowledging Riskified’s disciplined expense management, JPMorgan estimated that the company would need to accelerate volume growth from 5% in 2025 to approximately 25% in 2026 to hit its targets, expressing a preference for more scaled and profitable financial technology companies with diversified e-commerce exposure.
In other recent news, Riskified Ltd. reported its second-quarter results for 2025, surpassing expectations with an earnings per share (EPS) of $0.02, compared to the forecasted -$0.06. The company’s revenue also exceeded predictions, coming in at $81.1 million against an anticipated $79.99 million. Despite these positive earnings and revenue outcomes, there were concerns about gross profit margins, which fell short of expectations at approximately 50%, compared to the 51% expected and 53% from the previous year. Truist Securities maintained a Buy rating on Riskified, citing strong consumer spending and a robust sales pipeline. Meanwhile, UBS lowered its price target for the company to $5.00, expressing concerns over margin performance. Similarly, Keefe, Bruyette & Woods adjusted their price target to $5.25, noting a slight beat on adjusted EBITDA but highlighting lower gross margins. DA Davidson also reduced its price target to $6.00, maintaining a Buy rating but expressing concerns over growth. These developments reflect a mixed outlook from analysts, balancing positive earnings with concerns over profitability.
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