Shares in review platform Trustpilot sunk on Monday after analysts slapped a ‘Sell’ rating on the firm and warned of economic challenges ahead.
Trustpilot’s stock tumbled over eight per cent in early trading to around 216p.
Panmure Liberum analysts Sean Kealy and Johnathan Barrett cautioned the “deteriorating” state of the US economy would “test the business model’s cyclicality” in the coming year.
They said a risk or reward scenario was “skewed to the downside” and hit the firm with a 200p target price.
The FTSE 250 firm pocketed $210m (£161m) in revenue for 2024 – a 19 per cent jump from the previous year.
Bookings, which refer to the annual value of contracts signed or renewed with Trustpilot, rose 26 per cent year on year to $239m (£184m).
But analysts said there was a valuation disconnect with the stock’s pricing.
“Trustpilot’s shares price-in 30 years of perfect execution, yet both near-term and medium-term risks exist.
“There is little visibility over the long-term margin/growth mix.”
Trustpilot’s expansion plans come with fee
Kealy and Barrett said the firm was “at the foothills of a complex business transition”.
The platform has begun to pursue Enterprise clients as part of a new growth expansion aiming to get a clearer picture of its recurring customer base and access hefty brand investment.
Analysts said: “To do so may require [Trustpilot] to enter the more competitive customer experience market.”
In its full-year results, the review platform said growth in business adoption and brand awareness was “fuelling the flywheel”.
But analysts warned brand awareness and reliance on the marketing that “businesses will benefit from association with its brand” was a “weak pitch” in markets where its name was not as strong.
Trustpilot targetted constant currency revenue growth in the high teens for 2025 and a two percentage point improvement to earnings before interest, tax, depreciation and amortisation (EBITDA).
