JPMorgan downgrades Riskified stock rating on growth concerns

JPMorgan downgraded Riskified (RSKD) to Underweight, citing concerns over its revenue and volume growth significantly lagging the broader e-commerce sector and skepticism regarding its ability to achieve 2026 adjusted EBITDA targets. This downgrade comes despite RSKD reporting a Q2 2025 earnings and revenue beat; however, gross profit margins missed expectations. The mixed analyst sentiment, balancing recent financial beats with ongoing concerns about growth deceleration and profitability, underscores a challenging outlook for the company.

Analysis

JPMorgan's downgrade of Riskified Ltd. (RSKD) to Underweight from Neutral highlights a critical disconnect between the company's performance and broader industry trends. The core of the downgrade rests on RSKD's low-to-mid single-digit revenue and volume growth, which starkly contrasts with the high single-digit expansion of the e-commerce sector and the over 30% growth posted by discretionary spending peers like Shopify and Affirm. This underperformance is attributed to a significant client loss in Q4 2024 and softness in the luxury and travel segments. While RSKD surpassed Q2 2025 expectations with an EPS of $0.02 and revenue of $81.1 million, this beat is overshadowed by deteriorating fundamentals, specifically a decline in gross profit margins to 50%, below the 51% expected and down from 53% in the prior year. This margin compression fuels skepticism about RSKD's ability to reach its 15-20% adjusted EBITDA margin target by 2026, with JPMorgan forecasting a more conservative 10% and noting that the company would need an unlikely acceleration in volume growth to nearly 25% to meet its goal. The mixed analyst sentiment, with firms like UBS and Keefe, Bruyette & Woods lowering price targets due to margin concerns, reinforces the cautious outlook despite a maintained Buy rating from Truist.

Key Decisions for Investors

• Investors should weigh the recent earnings and revenue beat against the more significant trend of decelerating growth and contracting gross margins, which underpins the bearish thesis from JPMorgan.
• Given the stock's 14% decline and the downgrade, it is crucial to monitor upcoming reports for any evidence of a reversal in volume trends or recovery in the key luxury and travel verticals before considering a long position.
• The significant growth disparity with peers like Shopify and Affirm suggests investors may find more robust opportunities in scaled financial technology companies with diversified e-commerce exposure until RSKD demonstrates a credible path to achieving its 2026 margin targets.
• Pay close attention to gross profit margin performance in subsequent quarters, as the recent dip to 50% is a primary concern for analysts and could signal ongoing pricing pressure or an unfavorable business mix.