LegalZoom Stock Drops 2.34% as AI Partnership Fails to Offset Macro Headwinds

LegalZoom.com (LZ) fell 2.34% on October 10, 2025, marking a five-day losing streak with a cumulative decline of 6.05%. The stock hit an intraday low of $X.XX, its lowest since August 2025, amid renewed investor caution. Recent strategic moves, including a high-profile collaboration with OpenAI’s ChatGPT in August, had initially driven optimism but failed to sustain momentum as broader market conditions and internal dynamics shifted.

In August, LegalZoom announced a partnership to integrate ChatGPT’s AI into its platform, aiming to enhance document automation and client support. This collaboration, coupled with an upgraded 2025 revenue forecast to 8%, fueled a 12% stock surge at the time. However, subsequent earnings and macroeconomic factors have tempered investor enthusiasm. The company’s Q2 2025 report highlighted 12% revenue growth and improved gross margins, but these gains were partially offset by a weaker-than-expected U.S. jobs report in September, which triggered a broader market sell-off.

Institutional activity has remained mixed. Deutsche Bank and Nuveen LLC added significant stakes in August, while insider sales by the CFO and a director raised questions about management’s confidence. Analysts initially upgraded LegalZoom to “Buy” ratings, citing its AI-driven efficiency and subscription model, but recent volatility has led to cautious commentary. The company’s product launches, such as a streamlined patent filing service, underscore its focus on expanding market share, though their long-term impact remains untested.

LegalZoom’s competitive positioning in the legal tech sector appears resilient, with AI integration and recurring revenue streams insulating it from some macroeconomic risks. However, short-term challenges persist. The stock’s decline reflects a tug-of-war between optimism over innovation and concerns about macroeconomic headwinds. Investors are now closely watching whether the company can maintain its AI-driven growth trajectory amid a fragile economic backdrop.