Shares of Ibotta Inc. (NYSE: IBTA) fell sharply on Thursday, plunging more than 31% after the technology company’s second-quarter results came in below analyst expectations.
IBTA stock plunged 31% to trade at $23.34 at the time of writing.
The firm reported earnings of 8 cents per share, missing the 19 cents per share consensus estimate from analysts surveyed by LSEG.
Revenue for the quarter totalled $86 million, below the forecast of $90.5 million.
The results represented a 2% year-on-year revenue decline and came alongside a miss on adjusted earnings per share, which were $0.49 compared with analyst expectations of $0.52.
The weaker performance was linked to pressure from two Consumer Packaged Goods Incremental Demand (CPID) clients who opted not to renew their campaigns, as well as a salesforce reorganisation.
Price target cuts and analyst downgrades
Following the earnings release, several analysts moved to downgrade their outlook on the stock.
Needham lowered its price target from $70 to $33 but maintained a Buy rating, noting the stock’s steep six-month decline of more than 54% and arguing that current levels may present value for long-term investors.
The firm is now modelling roughly flat revenue for Ibotta next year, which it believes should provide a realistic base for future forecasts as the company works to stabilise operations.
Needham also pointed to Ibotta’s strong gross profit margins of 83% and a healthy current ratio of 2.37 as indicators of underlying financial resilience.
The firm sees potential upside from CPID in the future, highlighting the partial quarter revenue contribution from the two lost campaigns and the potential benefits of upcoming enterprise pilots.
However, other analysts adopted a more cautious stance. Goldman Sachs downgraded Ibotta from Buy to Neutral, citing challenges related to the company’s platform transition, and reduced its price target from $58 to $30.
Evercore ISI also lowered its rating from Outperform to In Line, slashing its target from $65 to $38, pointing to the disappointing second-quarter results.
Citizens JMP downgraded the stock from Market Outperform to Market Perform, expressing concern over delays in product development and limited visibility into future revenue streams.
Long-term outlook uncertain
The confluence of missed earnings, lowered guidance, and analyst downgrades has weighed heavily on investor sentiment.
With the range of potential outcomes for the stock widening, Needham suggested that Ibotta shares may be better suited for investors with a longer-term perspective.
While the immediate outlook remains clouded by client losses, organisational changes, and uncertainty over revenue growth, analysts have noted the company’s solid gross margins and liquidity as supportive factors.
Stability in revenue performance next year could provide a platform for recovery, particularly if Ibotta can leverage its CPID capabilities and enterprise partnerships effectively.
The stock’s steep losses on Thursday reflected market concerns over near-term performance, but for investors willing to weather volatility, analysts such as Needham continue to see potential upside.
Whether Ibotta can convert that potential into tangible growth will depend on its ability to address platform challenges, re-engage key clients, and deliver on product development plans.
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