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 several 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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LiveDeal (Nasdaq: LIVE) – Discerning What May Have Driven its 58% Gain

Relative Tickers: Nasdaq: GOOG, Nasdaq: BIDU, Nasdaq: YNDX, Nasdaq: LNKD, Nasdaq: AKAM, Nasdaq: ACOM, NYSE: AOL, Nasdaq: ATRN, Nasdaq: ABTL, AMEX: BNX, Nasdaq: BITA, Nasdaq: JRJC, Nasdaq: CCIH, OTC: CLKZ.PK, Nasdaq: EDGR, Nasdaq: DIETD, Nasdaq: GSOL, Nasdaq: HSTM, Nasdaq: HSWI, Nasdaq: INSP, Nasdaq: INXN, Nasdaq: DATE, OTC: KBAS.PK, Nasdaq: LOCM, Nasdaq: LOOK, Nasdaq: LEDR, OTC: MMRF.OB, OTC: PCIR.PK, OTC: QPSA.PK, Nasdaq: REDF, Nasdaq: RENN, OTC: SLNM.PK, Nasdaq: SOHU, Nasdaq: SFUN, Nasdaq: SBAY, Nasdaq: TTGT, Nasdaq: KNOT, NYSE: TST, Nasdaq: TZOO, AMEX: TCX, Nasdaq: VTRO, Nasdaq: WWWW, Nasdaq: WBMD, Nasdaq: YHOO, Nasdaq: YOKU, OTC: ZAOFF.PK, Nasdaq: LIVE, Nasdaq: NGSX, Nasdaq: SCEI, Nasdaq: WFSLW, Nasdaq: NFEC, NYSEArca: TVIX, AMEX: XPO, AMEX: ESA, NYSEArca: CVOL, NYSE: DST, NYSEArca: VZZ, Nasdaq: OVRL, Nasdaq: DHRM, Nasdaq: HOLI, AMEX: ELC, Nasdaq: CMED, Nasdaq: SMRT, Nasdaq: CDTI, Nasdaq: EPOC, Nasdaq: RGDX, Nasdaq: SPMD and Nasdaq: PFED.

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 in 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 bit of a confusing (to me) headline above the newest company press release on its press releases page (which I have saved and notified the company of), which read, “LiveDeal Secures Additional Commitments from Foreign Equity Investors.” There was no date on the press release teaser, leaving me unsure as to whether it was published today. Thus it was confusing to me. I suppose that if you only read that headline, something a prudent investor should never do, you may have misunderstood the page. However, if you clicked through the release underneath that headline, which offered a lead-in that discussed the appointment of the new CEO (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 text or leader. Only the headline was confusing if taken in isolation, which any investor should never do! However, I wonder if any did.

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.

Because of the possibility of a gunslinging investor potentially acting on incomplete due diligence, 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 certainly 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 steadily 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.

We will continue to explain vaguely understood stock movements as best we can for our readers, so join our mailing list or revisit us regularly. We welcome your requests. Simply submit your stock questions to us via comments to any of our articles or to a button we will establish shortly atop the blog. If the stock is especially active that particular day, or if it is of broad interest otherwise, we will dedicate a post toward answering your question.

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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RIMM Disconnect OR Consumer Spending Issue

The latest news received in Mobility may have as much to do with gasoline as it does with product segment disruption driven by Apple's iPhone and Google's Android. If consumer caution has increased in mobile phones, then investors had better steer clear of Consumer Discretionary stocks for as long as gasoline is this high and threatening further inflation.

Relative tickers: Nasdaq: RIMM, Nasdaq: AAPL, NYSE: NOK, Nasdaq: MSFT, NYSE: HPQ, NYSE: MOT, NYSE: MSI, Nasdaq: QCOM, NYSE: ALU, Nasdaq: ACOM, Nasdaq: SPWRB, Nasdaq: SPWRA, Nasdaq: FFBH, Nasdaq: NTGR, Nasdaq: WEBM, Nasdaq: STBC, NYSE: LVB, Nasdaq: ASGN, NYSE: MXL, Nasdaq: TNAV, Nasdaq: GBLI, Nasdaq: SCEI, NYSE: NR, Nasdaq: AMTC, NYSE: DRL, NYSE: TGS, NYSE: N, NYSE: LFT, AMEX: AIM, Nasdaq: SWKS, NYSE: KEG, Nasdaq: ZNWAW, Nasdaq: INUV; Losers – Nasdaq: REGN, Nasdaq: USATW, NYSE: HRZ, Nasdaq: KVHI, Nasdaq: EDSWW, NYSE: SKH, Nasdaq: USAT, Nasdaq: SUNH, Nasdaq: INPH, Nasdaq: SPPI, Nasdaq: ENSG, Nasdaq: ROSA, Nasdaq: CNGL, NYSE: ZZ, Nasdaq: GDOT, Nasdaq: CTCT, Nasdaq: SURW, NYSE: IM, Nasdaq: GFRE, Nasdaq: DECK, Nasdaq: TGIS, Nasdaq: DRIV, NYSE: RAS

RIM (Nasdaq: RIMM) Disconnect OR Consumer Spending Issue?

Research in Motion (Nasdaq: RIMM) dropped 14% Friday. RIM was slammed by a downgrade and severe price target slashing by RBC Capital Markets. Unfortunately, that followed the company's forecast revision, which was the real catalyst for the stock's slide. RBC cut the stock to "Sector Perform" from "Top Pick," and reduced its price target to $55 from $90.

Really? Are you serious? Can a story change that much overnight? A $35 change to a $90 price target calls for some serious explaining, not just to the investors who followed the advice, but to the boss. We're talking about a reduction of forecast value to 61% of the estimate that stood a day prior. As an analyst, I understand that when dealing with high-technology, emerging growth companies, significant shifts can occur in value opportunity (keyword). This is why we use scenario and sensitivity analysis, to hedge against this kind of catastrophe - if the analyst was ever right in the first place or is even right currently. Analysts are employed to at least come close, and that $35 shave is better suited for Vegas than Wall Street.

The Operations

Research in Motion cut its first quarter profit outlook, and looks to be following the path of other Apple (Nasdaq: AAPL) iPhone and Android (Nasdaq: GOOG) competitors turned footstools. The list includes Palm (saved by HP (NYSE: HPQ)) and Nokia (NYSE: NOK). Motorola (NYSE: MOT, NYSE: MSI) is so long gone that we almost forgot to mention it, sort of like a rotary dial telephone, irrelevant.

RIM cut its May-ending Q1 profit forecast to a range of $1.30 - $1.37 a share, down from $1.47 to $1.55. Yahoo Finance (Nasdaq: YHOO) had the analysts' consensus EPS estimate for RIMM at $1.48, and the lowest mark at $1.40, so even the most pessimistic of analysts surveyed was too optimistic in reality. Before last week, I bet the analyst with the low estimate felt naked; he was probably even pressured by his boss to stay tighter to the consensus from which he bravely ventured. We hope he made sure to see the boss took notice of RIM's news.

One of the company's CEOs (seems one too many) said in the conference call that it was a margin issue hurting the bottom line, which he blamed on aged high-end product. That seems to show a misconception, or hopeful desperation. The view from inside a company is often completely different than from the outside. If we were at dinner tonight, and I was Apple, and my date was RIM, I would likely say, "It's not you RIM, it's me."

But what if it was neither?

Given Broadcom's bad news earlier in the week and RIM's news to close out the week, not to mention the ongoing saga at Nokia (NYSE: NOK), I would be looking to get out of all mobile telecommunications stocks today. When Broadcom analysts blamed BRCM's drop on general product demand slippage in mobility, we had our doubts, but BRCM's customer list does not mention Research in Motion.

I would take my view a step further even. I'm wavering from all Consumer Discretionary shares for as long as gasoline remains near current levels, while threatening to go higher. This mobility squeeze may have as much to do with gasoline as it has to do with Apple and Google disruption. If consumers are being more cautious with regard to what is now considered a non-discretionary spend in mobile phones, then how much closer to the vest will discretionary money be kept? We said last week that the old adage, "Sell in May and Walk Away" seemed to make good sense today. With regard to consumer discretionary shares, I think you can add an exclamation point to that.

Article should interest investors in Apple (Nasdaq: AAPL), Nokia (NYSE: NOK), Microsoft (Nasdaq: MSFT), Google (Nasdaq: GOOG), Hewlett-Packard (NYSE: HPQ), Motorola (NYSE: MOT), Motorola Solutions (NYSE: MSI), QUALCOMM (Nasdaq: QCOM), Alcatel-Lucent (NYSE: ALU) . Friday's other most active stocks were led by: Gainers – Ancestry.com (Nasdaq: ACOM), SunPower (Nasdaq: SPWRB, SPWRA), First Federal Bancshares of Ark (Nasdaq: FFBH), Netgear (Nasdaq: NTGR), WebMediaBrands (Nasdaq: WEBM), State Bancorp (Nasdaq: STBC), Steinway Musical (NYSE: LVB), On Assignment (Nasdaq: ASGN), MaxLinear (NYSE: MXL), TeleNav (Nasdaq: TNAV), Global Indemnity (Nasdaq: GBLI), Sino Clean Energy (Nasdaq: SCEI), Newpark Resources (NYSE: NR), Ameritrans Capital (Nasdaq: AMTC), Doral Financial (NYSE: DRL), Transportadora de Gas (NYSE: TGS), Netsuite (NYSE: N), Longtop Financial (NYSE: LFT), Aerosonic (AMEX: AIM), Skyworks Solutions (Nasdaq: SWKS), Key Energy (NYSE: KEG), Zion Oil & Gas (Nasdaq: ZNWAW), Inuvo (Nasdaq: INUV); Losers – Regeneron (Nasdaq: REGN), USA Technologies (Nasdaq: USATW), Horizon Lines (NYSE: HRZ), KVH Industries (Nasdaq: KVHI), Exceed (Nasdaq: EDSWW), Skilled Healthcare (NYSE: SKH), USA Technologies (Nasdaq: USAT), Sun Healthcare Group (Nasdaq: SUNH), Interphase (Nasdaq: INPH), Spectrum Pharmaceuticals (Nasdaq: SPPI), The Ensign Group (Nasdaq: ENSG), iPath Short Extended Russell (Nasdaq: ROSA), China Nutrifruit (Nasdaq: CNGL), Sealy (NYSE: ZZ), Green Dot (Nasdaq: GDOT), Constant Contact (Nasdaq: CTCT), SureWest (Nasdaq: SURW), Ingram Micro (NYSE: IM), Gulf Resources (Nasdaq: GFRE), Deckers Outdoor (Nasdaq: DECK), Thomas Group (Nasdaq: TGIS), Digital River (Nasdaq: DRIV) and RAIT Financial (NYSE: RAS).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.