LZ

LegalZoom.com Inc.

TMT, Consumer


Presented:05/27/2022
Price:$12.85
Cap:$2.55B
Current Price:$6.79
Cap:$1.19B

Presented

Date05/27/2022
Price$12.85
Market Cap$2.55B
Ent Value$2.57B
P/E RatioN/A
Book Value$0.96
Div Yield0%
Shares O/S198.68M
Ave Daily Vol1,432,175
Short Int8.60%

Current

Price$6.79
Market Cap$1.19B
LegalZoom.com, Inc. engages in the provision of online legal solutions and services. Its products and services include attorney advice, wills, trusts, and family, and business. The company was founded by Brian P. Y. Liu, Brian S. Lee, Edward R. Hartman, and Robert Leslie Shapiro in July 1999 and is headquartered in Glendale, CA.

Publicly traded companies mentioned herein: Intuit Inc (INTU), Legalzoom.com Inc (LZ)

Highlights 

The presenter is long shares of Legalzoom.com Inc (LZ), the market leader for business formations and online legal services that primarily works with mom & pops rather than VC-backed startups or sophisticated entrepreneurs. LZ’s revenue mix is primarily made up by transactions (45%), which are essentially one-time fees for business formations, and subscriptions (55%), which offer customers add-on services such as a network of attorneys. LZ IPO’d in June 2021 at an offer price of $28 per share and ended its first trading day at $38, but it has since fallen to its current $12 due to an IPO sell-off, a broader growth stock sell-off, and what he portrays as sloppy VC distributions. However, the presenter views this as a unique business since it is the first touch point at a business’s inception and therefore has a massive opportunity to sell a wide range of services without any incumbents to unseat. It is also unique in that LZ is several times larger than its next biggest competitors. Despite investor concern regarding business formations given the macroeconomic landscape, he models 20%+ growth in 2023 – 2024 if business formations are slightly above the 2019 trendline (i.e., a reversion from the current trendline), and growth materially higher than 20% if business formations continue to hold on. If all goes well and this is seen as a strategic asset that can grow for a long time, the stock can double, bringing it back just below its IPO price.

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Idea Discussion

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