What happened
LivePerson (LPSN 3.01%) shares trounced the market in early trading on Tuesday. The stock had jumped 18% by 11:15 a.m. ET today compared to a slight decrease in the broader market. The rally erased only a small portion of recent losses investors have seen, though, as shares are still down over 30% so far in 2022.
It was sparked by news that an activist investor has taken a sizable position in the digital communication services specialist, with plans to push for strategic changes.
So what
Starboard Value has accumulated roughly $100 million of LivePerson's stock in the past few days, according to a filing with the Securities and Exchange Commission. That equates to nearly 10% of the company's outstanding share count, which means Starboard can play a key role in shaping management decisions. The company is known for using positions like these to agitate for shareholder-friendly moves, including greater cash returns and increasing profitability.
Image source: Getty Images.
Now what
LivePerson shares dropped last week after the company revealed slowing growth. Investors weren't thrilled to hear that management is shifting its focus toward capitalizing more fully on its existing customer base as annual sales gains decelerate to below 20%.
Starboard Value might help change the direction of some of those growth and profit initiatives, which could support improving returns for shareholders from here. At the very least, the activist fund's involvement seems likely to spur renewed urgency from the management team as it works to improve operating and financial trends in 2022.
