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Why Limelight Networks Stock Dropped 12% in April

By Demitri Kalogeropoulos - Updated May 10, 2021 at 8:39AM

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Booming demand for streaming video hasn't translated into sales or profit growth.

What happened

Limelight Network (EGIO) shareholders lost ground to a booming market last month. Their stock fell 12% in April compared to a 5.2% spike in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump added to wider losses, with the stock down over 20% so far in 2021.

A man watches TV.

Image source: Getty Images.

So what

Investors panned the cloud services provider's fiscal first-quarter results, which were released late in the month. That report showed a double-digit sales decline and ballooning net losses. "Our first quarter was challenging from a top- and bottom-line perspective," incoming CEO Bob Lyons said in a press release.

Now what

Lyons, who took over in early February, is aiming to get the business back on a solid growth trajectory. However, sales are still likely to fall in 2021, management predicts, even as costs remain elevated.

Executives are working on a broader restructuring plan for the second half of the year and have promised updates sometime this summer. Yet the tech stock will likely remain pressured until it becomes clear that the rebound initiative is allowing Limelight to diversify beyond the low-margin video delivery business.

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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