What happened
LivePerson (LPSN 5.12%) stock is collapsing this week following the publication of the company's fourth-quarter earnings results. At the end of Thursday's daily trading session, the company's share price had fallen 56% since last week's market close, according to data from S&P Global Market Intelligence.
LivePerson published its Q4 earnings results after the market closed on March 15, and investors had an intensely negative reaction to the company's performance and guidance. Stock is now down roughly 58% year to date and trades down roughly 94% from its lifetime high.
So what
For investors hoping for signs that LivePerson is benefiting from surging interest in AI, the company's Q4 report and forward guidance were devastating. The company posted a loss per share of $0.55 on revenue of $122.4 million, while the average analyst estimate had been targeting a per-share loss of $0.33 on sales of roughly $126.9 million. Sales were down roughly 1% compared to the prior-year period.
For this year's Q1, management is guiding for sales to come in between $106 million and $109 million, suggesting a year-over-year revenue decline of approximately 17.3%. For the full-year period, revenue is expected to be between $395 million and $410 million. This target fell far short of the average analyst estimate's call for sales of $525.88 million and suggests an annual sales decline of approximately 16.5% at the midpoint of the target. The weaker-than-expected results and guidance were followed by a series of stock downgrades from analysts.
Now what
While AI stocks have generally been hot lately, the space is also becoming increasingly competitive, and many businesses are facing pressures due to challenging macroeconomic conditions. Simply having some exposure to the AI space isn't enough to drive stock returns, particularly in light of some powerful bearish catalysts shaping trading for the broader market right now.
LPSN PS Ratio (Forward) data by YCharts
With LivePerson trading at less than 60% of this year's expected sales, the company no longer has a growth-dependent valuation, but it's not clear whether the customer-service specialist will be able to stabilize its business.
