On Monday, Goldman Sachs adjusted its stance on BigCommerce Holdings (NASDAQ:BIGC), downgrading the stock from Buy to Neutral. The firm also revised its price target downward to $9.50, a decrease from the previous $11.50 target. The change in rating is based on a reassessment of the company's market share growth prospects within the mid-market enterprise segment.
The analyst from Goldman Sachs noted that the previous Buy rating had been based on the expectation that BigCommerce would capture more market share in the mid-market enterprise space, thanks to its open-ecosystem software as a service (SaaS) approach. However, the firm now believes that these gains will take longer to materialize as BigCommerce continues to invest in product functionality and market penetration strategies.
According to Goldman Sachs, the competition from Shopify (NYSE:SHOP), especially its Shopify Plus platform, has been gaining momentum in the enterprise segment, which has contributed to a reassessment of BigCommerce's growth trajectory. The analyst pointed out that there appears to be more attractive investment opportunities within their coverage area.
Since Goldman Sachs initiated coverage with a Buy rating on December 13, 2021, BigCommerce's stock has seen a significant decline, falling 78% in value, while the Nasdaq has increased by 7% over the same period. This underperformance is attributed to weaker fundamentals for BigCommerce, including a downturn in Gross Merchandise Volume (GMV) trends post-COVID, challenges within the retail customer base, and longer sales cycles in the enterprise market.
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