LiveDeal (Nasdaq: LIVE) – Discerning What May Have Driven its 58% Gain
LiveDeal (Nasdaq: LIVE) might be mitigating its delisting issue, or the day's 58% gain may be without solid basis. We explore the possibilities herein, and expect you'll find value in our perspective. LiveDeal (Nasdaq: LIVE) led most shares Wednesday on no corporate news and little sign of reason. Even the message boards were empty of speculation. Thus, the mysterious movement only drew in more capital and perpetuated momentum of the lightly traded microcap stock with few shares outstanding and fewer floating.
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The stock closed up 58%, taking it to a technical level it had previously found comfort in. At $4.34 though, the shares still traded well short of their 52-week high of $22.25. Given the stock’s float of just 470K, based on Yahoo Finance data (Nasdaq: YHOO), it wouldn’t take much to move it like it did Wednesday. Institutional holders UBS (NYSE: UBS) and Wells Fargo (NYSE: WFC) recently (March 31, 2011) reported small stakes, though Thomson Financial data at Yahoo seems to show net sales on the institutional level through the quarter before last.
The latest news we could find on the wire was of LIVE’s delisting notification for violating a NASDAQ exchange rule regarding minimum shareholders equity, and so on May 24, 2011 it was given 45 days to show NASDAQ (Nasdaq: NDAQ) how it planned to achieve and sustain compliance. Therefore, perhaps the day’s movement can be explained to be relative to LiveDeal’s near-term ability to meet the NASDAQ’s listing rules. I say this because the shares began downward from $4 on the delisting release on May 24, and have restored the market value lost since that news broke in one day’s trading on Wednesday.
Thus, it would appear that someone is betting on the possibility of this company mitigating its delisting issue. The stock’s activity seems to reflect that driver if we are discerning clearly. My study of the company’s website turned up a confusing (to me) headline above the newest company press release on its press releases page (which I have saved), which read, “LiveDeal Secures Additional Commitments from Foreign Equity Investors.” I saw no date on the press release, leaving me unsure as to whether it was published today; the release itself said "today" within it regarding the news it offered. Thus it was confusing to me. If you only read that headline, you may have missed something important. If you clicked through the release underneath that headline, which offered a lead-in that was on a completely different topic than foreign investment (onus on the reader to notice), you found a news item detailing the appointment of the new CEO, which is old news. There was no information about a new foreign investment in the release itself either as it popped up after clicking to "read more".
I called in to LiveDeal and spoke with the Investor Relations contact, CFO Lawrence Tomsic, and he said the company had not issued any press release Wednesday nor announced any news of new foreign equity investors since the March 25 release last indicating so. He said the company had no comment with regard to the day’s stock movement, and knew of no specific timely reason for the stock’s activity Wednesday. Just as I misread the company’s website, it would seem possible that another investor might have bet on it. Thus, the driver of the 58% move in the stock could be without any base, though I cannot be sure; it could also be an independent bet on the company avoiding delisting; or it could be on another issue or theory or other reason. Whatever the case, I perceive risk in holding the shares now after the big gain, while not knowing the true driver and with those possibilities seemingly in the cards.
If the stock is up on a presumed ability to avoid delisting, without any other important news, it would seem the shares would find balance at around $4, where about it traded before the delisting warning. If the stock appreciation was driven by faulty reasoning, then the stock could move back toward where it stood before Wednesday, in my estimation, which was $2.75. In after-hours trading Wednesday, speculators have taken the shares to near $5 (seen on Yahoo Finance), which based on our reasoning here, looks lofty in my view (above $4) if not completely without base given the risks outlined above.
Note: Risk of missing upside also exists if the catalyst for the day's rise is something other than NASDAQ listing violation mitigation but still construed as positive by the market, or if that catalyst exists simultaneously with another, or for many other reasons.
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Disclosure: The author has no direct or beneficial interest in the shares of or securities relative to LiveDeal (Nasdaq: LIVE) or any other stock mentioned in this article.
The day’s top gainers included LiveDeal (Nasdaq: LIVE), NeurogesX (Nasdaq: NGSX), Sino Clean Energy (Nasdaq: SCEI), Washington Federal (Nasdaq: WFSLW), NF Energy Saving (Nasdaq: NFEC), VelocityShares Daily 2X (NYSEArca: TVIX), Express-1 Expedited Solutions (AMEX: XPO), Energy Services of America (AMEX: ESA), C Tracks Exchange Traded Notes (NYSEArca: CVOL), DST Systems (NYSE: DST), iPath Long Enhanced S&P 500 VIX (NYSEArca: VZZ), Overland Storage (Nasdaq: OVRL), Dehaier Medical Systems (Nasdaq: DHRM), Hollysys Automation (Nasdaq: HOLI), Eastern Light Capital (AMEX: ELC), China Medical (Nasdaq: CMED), Stein Mart (Nasdaq: SMRT), Clean Diesel Technologies (Nasdaq: CDTI), Epocrates (Nasdaq: EPOC), Response Genetics (Nasdaq: RGDX), SuperMedia (Nasdaq: SPMD), Park Bancorp (Nasdaq: PFED).
This article might interest other Internet Information Providers like Google (Nasdaq: GOOG), Baidu (Nasdaq: BIDU), Yandex (Nasdaq: YNDX), LinkedIn (Nasdaq: LNKD), Akamai (Nasdaq: AKAM), Ancestry.com (Nasdaq: ACOM), AOL (NYSE: AOL), Atrinsic (Nasdaq: ATRN), Autobytel (Nasdaq: ABTL), Banks.com (AMEX: BNX), Bitauto (Nasdaq: BITA), China Finance Online (Nasdaq: JRJC), ChinaCache International (Nasdaq: CCIH), Clicker Inc. (OTC: CLKZ.PK), EDGAR Online (Nasdaq: EDGR), eDiets.com (Nasdaq: DIETD), Global Sources (Nasdaq: GSOL), HealthStream (Nasdaq: HSTM), HSW Int’l (Nasdaq: HSWI), InfoSpace (Nasdaq: INSP), InterXion (Nasdaq: INXN), Jiayuan.com (Nasdaq: DATE), Knobias (OTC: KBAS.PK), Local.com (Nasdaq: LOCM), LookSmart (Nasdaq: LOOK), Market Leader (Nasdaq: LEDR), MMR Information (OTC: MMRF.OB), Prime Companies (OTC: PCIR.PK), Quepasa (OTC: QPSA.PK), Rediff.com (Nasdaq: REDF), Renren (Nasdaq: RENN), Salon Media (OTC: SLNM.PK), Sohu.com (Nasdaq: SOHU), SouFun Holdings (Nasdaq: SFUN), Subaye (Nasdaq: SBAY), TechTarget (Nasdaq: TTGT), The Knot (Nasdaq: KNOT), TheStreet.com (NYSE: TST), Travelzoo (Nasdaq: TZOO), Tucows (AMEX: TCX), Vertro (Nasdaq: VTRO), Web.com (Nasdaq: WWWW), WebMD (Nasdaq: WBMD), Yahoo (Nasdaq: YHOO), Youku.com (Nasdaq: YOKU) and Zaio Corp. (OTC: ZAOFF.PK).
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