LiveOne stock price surged by over 15% on Wednesday as investors cheered the company’s earnings and share repurchases program. The LVO shares rose to a high of $0.88, which was slightly above Tuesday’s close of $0.76. This rebound brings the company’s market cap to more than $60 billion, making it a penny stock.
What is LiveOne?
LiveOne is a technology company that is in the music and podcasting industries. The firm, which was previously known as LiveXLive operates three key products. First, it has LiveXLive, which is a music streaming product. It is a product that is similar to Spotify and Apple Music. It has Slacker, an integrated subscription and advertising streaming music product.
Third, like Spotify, the company has invested in podcasting. Its primary podcasting solution is known as PodcastOne, which is one of the many solutions. It competes with popular solutions like Stitcher, Podcast Addict, and Podbean.
The other smaller divisions of LiveOne are its production and merchandise business. LiveOne makes its money through advertisements, subscriptions, and merchandise. Like Spotify, it then spends most of its income paying music labels like Live Nation, Universal Music Group, and Sony Music among others.
LiveOne earnings review
The LiveOne stock price rose on Wednesday after the company published its fourth-quarter earnings. Its revenue rose by 11% to $23.4 million. As a result, the company’s total revenue for the year rose by 79% to $117 million, making it one of the fastest companies in the entertainment industry.
Its annual contribution margin soared by 48% to $24 million compared to the previous $16.2 million. This happened as the number of paid members in the ecosystem jumped to more than 1.58 million. This was a 510k increase from the same period in 2021. Total members, including non-paying ones, rose to 2.3 million. In a statement, the company’s CEO said:
“The momentum in LiveOne’s audio business, which includes Slacker Radio and PodcastOne, continues to improve as a result of continued growth of paid members through partnerships, including Tesla, as well as an increase in advertising and sponsorships.”
LiveOne also decided to maintain its previous guidance. It expects to make between $125 million and $140 million this year.
Is LVO a good investment?
LiveOne stock price has been in a strong bearish trend in the past few months. Precisely, it has dropped by about 90% from its all-time high of $6.95. At its peak, the company had a market capitalization of more than $360 million.
It is not alone since other companies in the streaming business have also slumped. For example, Spotify shares have cratered by over 65% in the past 12 months. Block, the parent company of Tidal, has seen its stock drop by more than 75%. Other streaming stocks that have dropped are Netflix, Curiosity Stream, and even Disney.
LiveOne’s crash is also in line with the performance of other tech companies as the Federal Reserve tightens. Examples of other tech stocks that have dropped are Boxed and Affirm.
Still, there are two main reasons why LiveOne seems like a good penny stock to buy. First, the company is implementing a share repurchase program that will reduce the number of outstanding shares. In April, the management committed to buy 2 million shares. It has already bought 1.2 million shares for about $1 million.
Second, the company is considering strategic alternatives. In a statement, the firm said that it was working with JP Morgan to find the ideal outcome. The potential results are the outright sale of the firm or divestiture. Therefore, there is a possibility that the firm will be sold at a premium soon.
LiveOne stock price forecast
The daily chart shows that the LiveOne share price has been in a strong bearish trend in the past few months. Precisely, it has dropped by 90% from its all-time high. A closer look shows that it has found a strong bottom at about $0.6106, which was the lowest level this year. LiveOne remains slightly below the 25-day and 50-day moving averages.
Therefore, the overall outlook for the stock is bearish if history is to go buy. Still, we cannot rule out a situation where the stock makes a strong comeback as it explores an exit strategy. If this happens, a move to $2 cannot be ruled out.