Good Morning!
Today I want to bring everyone out of their comfort zone a bit and look at a stock that has been making headlines recently, though it might be a little higher priced than you’re used to.
LiveDeal Inc. (LIVE) rocketed so high out of our league last month that I thought I’d never even get the chance to pitch it your way.
It’s not that LIVE is too good for you because their online restaurant coupon business is generating cash and thrilling analysts. Not at all!
It’s just that I knew you’d get whiplash if I jumped straight from our penny zone to a $25 chart -- which is where LIVE was trading three weeks ago!
We are all cheap, I get that! If a stock costs more than an extremely fancy cup of coffee, we can get dizzy and a little cranky!
So when LIVE split a week ago, it was kind of a “now or never” chance to get it in front of you guys at a level where you might actually take a shot. (Read more)
Try not to get any nosebleeds as you check out the LIVE chart -- and remember, all of this action is already split-adjusted:
The first thing you’ll notice is that for such a lofty PPS, LIVE can still move like one of the penny plays we usually see around here.
I’ve circled a few of the biggest intraday surges LIVE has handed traders on the way up from a “split-adjusted” $1 low right after Thanksgiving.
As you’d expect after a multi-bag bull bender, the technical indicators are now loaded with all the earmarks of a classic momentum story. But is that always bad?
RSI hasn’t dipped below the 50-point “bull” line since Thanksgiving -- the only question is how long LIVE can thrive on the edge of “overbought.”
And MACD went positive on Wednesday to confirm the latest move. Granted, that could be an artifact of the split, but a signal is a signal.
That volume spike LIVE saw last week is definitely an artifact of triple the shares chasing around the market, but don’t be quick to roll your eyes!
Factor out the split impact and LIVE is still pulling DOUBLE the liquidity it attracted even one short week ago, so this snowball is definitely rolling.
What’s behind all this excitement? It really boils down to hopes that LIVE has finally cracked the local mobile advertising business!
Think of Groupon and its coupons, only a lot easier for truly “local” small businesses to play around with and actual consumers to use.
You can see how it works on LiveDeal.com. My guess is that it’s so smooth because LIVE has a track record for running online marketing campaigns.
Friday’s earnings prove that there’s actually revenue in this business, no matter what you might hear the shorts whispering.
Counting the marketing and other old products, LIVE claims to have booked close to $2.3 million in calendar 2013 sales at a gross margin of around 63%!
(There’s also a lot of “accounts receivable” stacking up in the pipeline, but no need to count those dollars before the checks actually clear!)
The coupon business is already growing faster than the legacy business is eroding, so LIVE may finally be in a position to start growing again.
After all, Groupon somehow became a $7 billion company primarily on the strength of its growth curve. LIVE needs that curve to point the right way.
Luckily, LIVE has the drivers in place to grow extremely fast. Until very recently, their tech was in “soft launch” mode: San Diego only.
Then LIVE rolled into Los Angeles and San Francisco, doubling traffic to its web site in the process and presumably making advertisers happy. (Read more)
And on Thursday, they felt ambitious enough to take on the Big Apple and its 42,000 potential advertisers -- almost doubling the California opportunity.
Can LIVE capture just a small part of the New York City restaurant scene and double its customer base? If so, I’d think that qualifies as “growth!”
One note: despite the healthy PPS, LIVE is no billion-dollar behemoth, so every trickle of revenue helps to move the needle.
CEO Jon Isaac has held onto 43% of the float and while some post-split market cap calculations look low, you can see that the valuations scale fast!
As I mentioned, analysts are already chiming in with euphoric predictions and prognostications of what LIVE shares may be worth some day.
Maybe they’re getting a little ahead of themselves, but between the buzz, the bona fide revenue rolling in and that chart, anything can happen.
So make room for LIVE on your screen today -- and see if it lives up to its reputation and its name!
May all your trades be green!