Let's dig into the relative performance of LegalZoom (NASDAQ:LZ) and its peers as we unravel the now-completed Q1 online marketplace earnings season.
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
The 15 online marketplace stocks we track reported a decent Q1; on average, revenues beat analyst consensus estimates by 4.2%. while next quarter's revenue guidance was 2.4% above consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and while some of the online marketplace stocks have fared somewhat better than others, they collectively declined, with share prices falling 2.6% on average since the previous earnings results.
LegalZoom (NASDAQ:LZ) LegalZoom (NASDAQ:LZ) is an online platform that provides online legal services to individuals and small businesses. The company’s co-founders found it difficult and expensive to find lawyers and file paperwork when trying to start a business so they started LegalZoom instead to address this pain point.
LegalZoom reported revenues of $174.2 million, up 5% year on year, in line with analysts' expectations. Overall, it was a weak quarter for the company with slow revenue growth and full-year revenue guidance missing analysts' expectations.
“I am excited by the momentum we are seeing across our ecosystem. We began the year with strong demand for our new compliance offering, continued to enhance our formations experience, and are innovating towards creating a modern technology platform that provides a simple and affordable experience for legal and financial services,” said Dan Wernikoff, LegalZoom’s Chief Executive Officer.
LegalZoom delivered the weakest full-year guidance update of the whole group. The company reported 1.61 million users, up 6.9% year on year. The stock is down 49.6% since reporting and currently trades at $6.15.
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Best Q1: MercadoLibre (NASDAQ:MELI) Originally started as an online auction platform, MercadoLibre (NASDAQ:MELI) is a one-stop e-commerce marketplace and fintech platform in Latin America.
MercadoLibre reported revenues of $4.33 billion, up 36% year on year, outperforming analysts' expectations by 12.1%. It was a stunning quarter for the company with exceptional revenue growth.
The market seems happy with the results as the stock is up 16.7% since reporting. It currently trades at $1,758.
Slowest Q1: CarGurus (NASDAQ:CARG) Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ:CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.
CarGurus reported revenues of $215.8 million, down 7% year on year, in line with analysts' expectations. It was a weak quarter for the company with slow revenue growth and underwhelming revenue guidance for the next quarter.
Interestingly, the stock is up 13.6% since the results and currently trades at $25.30.
Robinhood (NASDAQ:HOOD) With a mission to democratize finance, Robinhood (NASDAQ:HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.
Robinhood reported revenues of $618 million, up 40.1% year on year, surpassing analysts' expectations by 11.4%. Zooming out, it was a very strong quarter for the company with exceptional revenue growth.
Robinhood scored the fastest revenue growth among its peers. The company reported 23.9 million users, up 3.5% year on year. The stock is up 28.4% since reporting and currently trades at $22.94.
Cars.com (NYSE:NYSE:CARS) Originally started as a joint venture between several media companies including The Washington Post (NYSE:POST) and The New York Times, Cars.com (NYSE:CARS) is a digital marketplace that connects new and used car buyers and sellers.
Cars.com reported revenues of $180.2 million, up 7.8% year on year, in line with analysts' expectations. Taking a step back, it was a mixed quarter for the company. Its revenue growth regrettably slowed and its EPS missed analysts' estimates. On the bright side, its full-year revenue guidance beat Wall Street's expectations.
The company reported 19,381 active buyers, up 1% year on year. The stock is up 11.9% since reporting and currently trades at $19.10.
This content was originally published on Stock Story
