LegalZoom.com Faces Slower Growth, Higher Costs From AI Search Disruption, BofA Says

11:43 AM EST, 11/05/2026 (MT Newswires) -- LegalZoom.com (LZ) faces slower growth and higher customer acquisition costs as AI-driven changes in online search weigh on business formations, BofA Securities said in a Thursday note. The company's business formations fell 13% in Q3 as Google shifted from organic search to AI dialogues in May, the investment firm said. LegalZoom's customer acquisition costs are rising as it increases advertising investments in AI to offset slower customer inflow, BofA added. The investment firm lowered the company's Q4 revenue growth estimate to 0% from 3%, and decreased its EBITDA margin estimate to 27% from 31%. BofA downgraded the stock to underperform from buy and cut its price objective to $6 from $9. Shares of LegalZoom were down 14.7% in Thursday trading. Price: 5.89, Change: -1.02, Percent Change: -14.71