LivePerson (LPSN 1.97%) shareholders lost ground to the market last month as their stock fell 25% compared to a 0.8% decline in the S&P 500. According to data from S&P Global Market Intelligence, the drop pushed the stock down over 40% so far in 2021 compared to a 25% rally in the wider market.
Shares were hurt by fears about slowing growth, plus a shift in sentiment away from many tech-based growth stocks in November.
LivePerson started the month off on a positive note. Sales expanded 25% through late September, the artificial intelligence (AI) chat specialist revealed on Nov. 2. That revenue figure, in addition to the adjusted earnings margin of 6% of sales, was near the top of management's short-term outlook. It also marked the sixth consecutive quarter of at least 25% growth, year over year.
Management in a conference call highlighted the fact that the platform handled 1.5 billion AI conversations with consumers, a record for the business. A key challenge going forward, though, is gaining new customers. "The installed base continues to take most of our capacity, which is a really good thing," CEO Robert LoCascio said, "but we must continue to ramp additional [marketing] capacity so we can go after new [clients] and opportunities."
LivePerson's short-term outlook calls for sales growth to slow in the fourth quarter, with revenue rising about 22% to $125 million. That deceleration, however modest, had Wall Street selling the stock off along with many growth-focused rivals last month.
LivePerson still sees revenue landing as high as $471 million this year, which is solid growth for the business. Losses will be slightly higher than previously forecast due to extra spending in areas like marketing, but that's no reason for investors to abandon their bullish thesis on the stock.
2022 will likely be an exciting year for the platform, with voice-based chat rolling out in the first half of the year. LivePerson executives are also looking forward to launching smarter AI that can make instant adjustments during conversations to deliver better customer service.
Those are the trends that should help LivePerson as it works toward its goal of becoming a much larger business over time. And, while this growth stock is likely to see more volatility during market downturns, its long-term returns will depend on how well the platform delivers increasing value to clients.