JPMorgan's Downgrade of Riskified: A Cautionary Signal for E-Commerce Risk Tech Investors?

JPMorgan’s recent downgrade of Riskified (NYSE: RSKD) to Underweight from Neutral has sent ripples through the e-commerce risk technology sector, signaling concerns about the company’s ability to scale profitably in a rapidly evolving market. The downgrade, rooted in strategic growth underperformance and margin pressures, raises critical questions for investors about the sustainability of Riskified’s business model and the broader health of the e-commerce risk tech industry.

Strategic Growth Underperformance: Lagging Behind the Curve

Riskified’s revenue and volume growth—pegged at low-to-mid single digits in 2025—has trailed the broader e-commerce sector’s high single-digit expansion [1]. This gap is alarming given that e-commerce is projected to grow at a 7.54% CAGR through 2033, driven by AI-powered personalization and omnichannel adoption [4]. JPMorgan’s skepticism centers on Riskified’s capacity to accelerate volume growth from 5% in 2025 to 25% by 2026, a trajectory that appears increasingly unrealistic amid rising operational complexity [1]. The firm’s inability to match the pace of the sector suggests a misalignment with the technological and consumer trends reshaping e-commerce, such as real-time fraud detection and AI-driven logistics [5].

Margin Pressures: A Sector-Wide Challenge

Riskified’s gross profit margins have declined to 50%, below industry expectations, compounding JPMorgan’s concerns [1]. This decline mirrors broader margin pressures in the e-commerce technology sector, where tariffs, supply chain disruptions, and rising R&D costs are squeezing profitability. For instance, U.S. tariffs on Chinese imports have pushed e-commerce growth forecasts down to 5.2% in 2025, with some scenarios predicting as low as 1.8% [6]. Technology firms, including those in risk tech, are particularly vulnerable, with 32% reporting gross margin declines of 1–5% due to tariff-driven cost inflation [3]. Riskified’s failure to meet its 2026 adjusted EBITDA margin targets of 15–20%—JPMorgan predicts only 10%—further underscores its struggle to balance innovation with profitability [2].

Sector-Wide Risks: AI Fraud and Omnichannel Vulnerabilities

The e-commerce risk tech sector is grappling with unprecedented challenges. AI-powered fraud, which now accounts for 91% of merchants’ top concerns, is outpacing traditional fraud prevention tools [1]. Cybercriminals are leveraging generative AI to create synthetic identities and intelligent bots, forcing companies to invest in real-time behavior analytics and layered identity verification [5]. Meanwhile, omnichannel expansion has widened attack surfaces, exposing vulnerabilities in unsecured APIs and inconsistent security protocols [2]. These trends are pushing e-commerce businesses to prioritize risk management, yet Riskified’s stagnant growth suggests it may be falling behind competitors in addressing these threats.

A Cautionary Signal for Investors

JPMorgan’s downgrade serves as a cautionary signal for investors, highlighting the fragility of risk tech firms that fail to align with sector-wide innovation cycles. While the e-commerce market is forecasted to reach $12.6 trillion by 2033, companies like Riskified must demonstrate scalable growth and margin resilience to justify their valuations [4]. The firm’s current trajectory—marked by declining margins and sluggish volume growth—raises doubts about its ability to capitalize on AI-driven opportunities or mitigate emerging risks like BNPL fraud and supply chain volatility [1].

Conclusion

The e-commerce risk tech sector is at a crossroads. While technological advancements like AI and blockchain offer transformative potential, they also demand significant investment and operational agility. Riskified’s downgrade underscores the need for firms to not only innovate but to do so profitably. For investors, the message is clear: strategic alignment with sector trends and margin discipline will be paramount in navigating the next phase of e-commerce’s evolution.

Source:
[1] JP Morgan Downgrades Riskified to Underweight from Neutral, Analysts Say [https://www.ainvest.com/news/jp-morgan-downgrades-riskified-underweight-neutral-analysts-2508/]
[2] Riskified downgraded to Underweight from Neutral at JPMorgan [https://www.tipranks.com/news/the-fly/riskified-downgraded-to-underweight-from-neutral-at-jpmorgan-thefly]
[3] Technology Sector Faces Margin Pressure Under New Trade Tariffs [https://www.forbes.com/sites/jessicamendoza1/2025/08/04/technology-sector-faces-margin-pressure-under-new-trade-tariffs/]
[4] Global E-Commerce Market Size and Forecast 2025-2033 [https://www.renub.com/global-e-commerce-market-p.php]
[5] 5 Emerging Ecommerce Risk Trends to Watch in 2025 [https://blog.rsisecurity.com/5-emerging-ecommerce-risk-trends-you-need-to-watch-in-2025/]
[6] Impact of Tariffs on Brands: What You Need to Know [https://metricscart.com/insights/impact-of-tariffs-on-brands/]