Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

How Limelight Networks, Inc. Stock Rose 75% in 2017

By Anders Bylund - Jan 9, 2018 at 4:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With a sharp focus on higher-quality service contracts, the content delivery expert turned a solid profit last year -- for the first time in ages.

What happened

Shares of Limelight Networks ( LLNW 0.00% ) gained 75% in 2017, according to data from S&P Global Market Intelligence. Believe it or not, that soaring return includes a 26% drop in December.

So what

After years of slow sales and negative earnings, the content-delivery specialist roared back to life in 2017 with four positive earnings surprises and a 17% annual rate of revenue growth in the latest report. Limelight is making a conscious effort to focus on high-quality contracts rather than chasing empty revenue calories, putting discounts and lowest-bidder strategies aside until further notice. Ironically (in a positive sense), that strategy didn't just expand Limelight's profit margins but also kick-started the company's top-line sales.

Limelight Networks' logo.

Image source: Limelight Networks.

Now what

"Quality over quantity" is the formula behind Limelight's big wins in 2017, and management is likely to stick to those guns for years to come. It's been at least eight years since the business looked this strong, and Limelight is pulling these numbers off in a market where some of the largest content delivery clients are building their own content networks instead of relying on third-party partners.

Curiously, Limelight's shares were headed for an even more impressive full-year return when largest shareholder Goldman Sachs decided to sell half of its 28% stake in the company. That announcement immediately sent share prices more than 10% lower, followed by a slower slide throughout December. All of this would have made sense if Limelight were printing new shares to cover Goldman's sales of 15 million stubs, but the entire sale came out of the investment firm's existing share stash. Limelight's share count did not increase at all that day. I wouldn't be surprised to see the stock chart turning upward again when Limelight Networks reports full-year results in early February.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Limelight Networks, Inc. Stock Quote
Limelight Networks, Inc.
$2.71 (0.00%) $0.00

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/02/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.