Getty Images' AI Uncertainty, FX Headwinds, Premium Valuation Spark Downgrade

JPMorgan analyst Cory Carpenter downgraded Getty Images Holdings GETY stock from Neutral to Underweight. The stock price declined after the rerating.

Getty Images is a leading visual content creator and marketplace that connects over 576,000 content creators with 719,000 purchasing customers.

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The rerating reflects Getty Images stock trading at a healthy premium to Shutterstock Inc SSTK, uncertainty around the potential longer-term impact from generative AI on the industry, potential growth headwinds in 2025 (lapping even-year events + FX) and limited capital allocation flexibility.

Getty Images returned to growth in recent quarters driven by a strong event calendar (U.S. election and Olympics), lapping easier Hollywood strike comps and agency channel stability.

Carpenter expects these trends to persist in the fourth quarter but noted the 2025 setup will be more challenging as the event calendar turns into a ~$10 million-$12 million headwind and Getty Images has high foreign exchange exposure relative to the rest of the analyst’s coverage universe.

Carpenter expects this to translate into limited revenue growth and margin expansion in 2025. This, coupled with ongoing uncertainty around the potential longer-term impact of generative AI on the industry, Getty Images trading at a healthy premium to Shutterstock, warrant litigation overhang and limited capital allocation flexibility, gives the analyst a cautious bias on the stock next year.

GETY Price Action: Getty Images stock is down 4.67% at $2.45 at publication Wednesday.

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Photo: Shutterstock