- Goldman Sachs (NYSE: GS) downgrades BigCommerce Holdings (NASDAQ: BIGC) from Buy to Neutral.
- Price target slashed to $9.50 from the previous $11.50 amid reassessment of market share growth.
- BigCommerce’s open-ecosystem SaaS model expected to take longer to yield market gains.
- Intensifying competition from Shopify (NYSE: SHOP), particularly in the enterprise segment, affects growth trajectory.
- BigCommerce stock has seen a significant decline, dropping by 78% since coverage initiation.
- Weak post-COVID Gross Merchandise Volume (GMV) trends, retail challenges, and extended sales cycles contribute to downturn.
Goldman Sachs downgrades BigCommerce, setting a neutral rating with a $9.50 target :
Goldman Sachs (NYSE:GS) has downgraded BigCommerce Holdings (NASDAQ:BIGC) from Buy to Neutral. Furthermore, the firm lowered its price goal to $9.50, a significant fall from the previous estimate of $11.50. This decision was made after reevaluating BigCommerce’s market share growth prospects in the mid-market enterprise segment.
Reassessing Growth Prospects :
The analyst at Goldman Sachs noted that the previous Buy recommendation was predicated on BigCommerce‘s potential to acquire a larger part of the mid-market enterprise space, owing to its open-ecosystem Software as a Service (SaaS) architecture. However, BigCommerce predicts that reaching these advantages will take longer time as it concentrates on improving product functionality and adopting market penetration tactics.
Rising Competition from Shopify :
Goldman Sachs cited rising competition from Shopify (NYSE:SHOP), particularly through its Shopify Plus platform, as impacting the rethink of BigCommerce’s growth trajectory. The analyst underlined Shopify’s growing presence in the enterprise category, necessitating a reconsideration of investment objectives within the covered area.
Market Performance and Trends :
BigCommerce’s stock has fallen 78% in value since we initiated coverage with a Buy rating on December 13, 2021. In contrast, the Nasdaq index increased by 7% during the same period. This reduction is attributable to BigCommerce’s poorer fundamentals, which include a decline in Gross Merchandise Volume (GMV) trends following COVID, issues within the retail customer base, and extended sales cycles in the corporate sector.
In essence, Goldman Sachs’ decision to downgrade BigCommerce reflects a conservative assessment of the company’s growth prospects in the mid-market enterprise area. The lowered rating and target price are due to increased competition from Shopify as well as hurdles in addressing market dynamics. Investors will closely examine BigCommerce’s tactics as it deals with these hurdles performance in the dynamic e-commerce industry.