Why Shutterstock’s Stock Shuttered Today

Shares of Shutterstock (SSTK 28.75%) plummeted to an all-time low on Wednesday. The stock was down by 29% at 2:45 p.m. ET, as Getty Images (GETY 10.46%) walked away from the Shutterstock merger it announced in January.

The U.K. said, “Not so fast, mate”

The deal didn’t survive regulatory requirements.

The British Competition and Markets Authority asked the companies to exclude Shutterstock’s editorial services from the merger. Including it would result in a “substantial lessening of competition” in the field of U.K. journalism, according to the regulatory body.

The Authority recently cleared this merger on the condition of spinning out Shutterstock’s editorial business. That was a deal-breaker for Getty, whose Board of Directors unanimously canceled the merger. Getty will pay down $628 million of debt notes, which were intended to finance the Shutterstock deal.

Getty’s stock also fell on the news, dipping as much as 10.5% around 11 a.m. ET. Together, the two image service stocks burned roughly $200 million of investor value today.

Image source: Getty Images. Ironic, I know.

Is there a silver lining here?

So where does this leave investors? Two jilted image companies, both trading at bargain-bin valuations, both bleeding red ink on the bottom line, both in the microcap category since 2024.

The merger would have created cost synergies and combined two struggling competitors. Without it, each company faces the generative AI threat alone. Shutterstock has been building AI tools and licensing deals; Getty has pursued similar strategies. Whether either can stabilize on its own remains uncertain. Hitting the panic button due to a single British carve-out requirement looks like a bad idea.

The valuations look tempting on paper, with both stocks trading at price to free cash flow ratios below 6. But “cheap” and “good investment” aren’t always the same picture. I’m not drooling over Shutterstock or Getty shares in today’s dip.