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ZipRecruiter (ZIP, Financials) shares dropped 15.9% to $5.66 on Wednesday after Barclays downgraded the stock from Overweight to Equal Weight and cut its price target from $10 to $6, citing concerns over earnings estimates and an uncertain revenue growth trajectory.
Having dropped around 46% over the last year, the company now trades at a P/E ratio of 156x. Though its 2025 EBITDA margin projection fell short of expectations, ZipRecruiter posted fourth-quarter income of $111 million, above the average forecast of $107.77 million.
Barclays underlined as a factor affecting profitability growing marketing and sales expenditures. The company expects difficulties ahead despite a gross profit margin of 89.5% and a current ratio of 7.4x.
Through the purchase of UK-based company rating site Break Room and new product introductions to generate future income, ZipRecruiter has been broadening its market footprint. Strong user involvement was also shown by a 15% year-over-year rise in online traffic.
Analysts remain wary about possible income growth in late 2025, which the business anticipates depending on a labor market rebound.
Other companies also changed their views about ZipRecruiter. Goldman Sachs dropped its target to $8, still keeping a neutral rating; Evercore ISI trimmed its aim to $10.
Investors are attentively observing how more marketing initiatives will affect general financial performance and revenue development.
This article first appeared on GuruFocus.