LivePerson (LPSN) Weak On High Volume

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer.

Trade-Ideas LLC identified LivePerson ( LPSN) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified LivePerson as such a stock due to the following factors:

  • LPSN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $4.3 million.
  • LPSN has traded 76,421 shares today.
  • LPSN is trading at 3.83 times the normal volume for the stock at this time of day.
  • LPSN is trading at a new low 4.10% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on LPSN:

LivePerson, Inc. provides online engagement solutions that facilitate real-time assistance and expert advice in the United States, Canada, Latin America, South America, Europe, the Middle East, Africa, and the Asia-Pacific. It operates in two segments, Business and Consumer. Currently there are 3 analysts that rate LivePerson a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for LivePerson has been 281,200 shares per day over the past 30 days. LivePerson has a market cap of $534.2 million and is part of the technology sector and computer software & services industry. The stock has a beta of 0.98 and a short float of 3.2% with 3.13 days to cover. Shares are down 32.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates LivePerson as a sell. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, disappointing return on equity, weak operating cash flow and feeble growth in its earnings per share.

Highlights from the ratings report include:
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 159.2% when compared to the same quarter one year ago, falling from -$0.79 million to -$2.06 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Internet Software & Services industry and the overall market, LIVEPERSON INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly decreased to -$7.58 million or 152.75% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • LIVEPERSON INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, LIVEPERSON INC reported poor results of -$0.13 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($0.29 versus -$0.13).
  • In its most recent trading session, LPSN has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, we do not believe this stock offers ample reward opportunity to compensate for the risks, despite the fact that it rose over the past year.

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