What happened
Limelight Networks (EGIO -9.23%), which operates a content delivery network (CDN), wasn't a bright light on the stock exchange Tuesday. The shares closed down by slightly over 8% on the back of a downgrade from a prominent investment bank.
So what
When Goldman Sachs (GS -0.23%) speaks, the market tends to listen. Unfortunately for Limelight Networks, the investment bank's analyst Brett Feldman is talking recommendation change on the tech stock. He's shifted his to sell from neutral, and is cutting his price target down to $2.50 per share; previously it was $3.
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Feldman believes that Limelight Networks, which installed Bob Lyons as its new CEO in February, is taking sensible steps to improve its business after a string of weak earnings reports. Still, the company faces significant and determined competition in its very hotly contested industry.
"While we expect [Limelight Networks] to show continued improvements, as new management has already implemented a number of key positive changes, we believe that stabilizing the CDN business in this environment will be challenging," Feldman said.
And, he wrote, while the company might generate significant growth with new-ish services like its edge computing, it hasn't yet proved that it can effectively compete in such spaces.
Now what
The analyst's argument was clearly landing with investors on Tuesday. With its recent management shake-up and its disappointing performance during the coronavirus pandemic -- a time that was otherwise a boon for companies associated with streaming video services -- people continue to turn bearish on Limelight Networks.
