Evaluating LegalZoom.com's Valuation: Is the Stock Overpriced?

LegalZoom.com's stock price has increased significantly, but it is still trading above its industry average price-to-earnings ratio. The company's high beta indicates that its stock price can be volatile, and its future outlook is optimistic with expected earnings growth of 84% over the next few years. Shareholders may be wondering if the stock is still cheap, but its current price may reflect its positive outlook.

LegalZoom.com's stock price has experienced a significant increase, yet it remains trading above its industry average price-to-earnings (P/E) ratio. The company's high beta suggests that its stock price can be volatile, while its future outlook is optimistic with expected earnings growth of 84% over the next few years. This raises the question of whether the stock is still undervalued, given its current price reflects its positive outlook.

LegalZoom.com, a digital legal-advice company, has shown strong growth in its subscriber base and revenue. The company's stock has been relatively flat over the past year, but it has gained attention for its improving financial performance. According to [1], LegalZoom's revenue grew by 5% year-over-year (y/y) in Q1 2025, beating Wall Street expectations. Subscription revenue, which accounts for 63% of total revenue, grew by 8% y/y, indicating a shift towards recurring revenue streams.

The company's high beta, which measures its stock price volatility relative to the market, suggests that its stock price can be sensitive to market movements. However, this volatility can also present opportunities for investors looking to capitalize on potential price fluctuations.

Despite its high beta, LegalZoom.com's future outlook is positive. The company expects earnings growth of 84% over the next few years, driven by its expanding subscriber base and increasing revenue from subscription services. This growth is supported by the company's strong cash position and ongoing buyback program, which currently totals $150 million [1].

However, the company's stock price remains above its industry average P/E ratio. This could indicate that the market is already pricing in the company's positive outlook, and investors may be cautious about the potential risks associated with its high beta and exposure to macroeconomic uncertainties.

In conclusion, LegalZoom.com's stock price has surged despite trading above its industry average P/E ratio. The company's high beta suggests that its stock price can be volatile, but its positive outlook and strong financial performance make it an attractive investment opportunity for those willing to take on additional risk.

References:
[1] https://seekingalpha.com/article/4796505-legalzoom-improving-subscription-trends-expanding-margins-lower-share-price
[2] https://www.marketbeat.com/instant-alerts/legalzoomcom-inc-nasdaqlz-receives-average-rating-of-hold-from-analysts-2025-06-23/