|Written by GSCR Staff|
|Thursday, 28 June 2012 09:14|
How would you describe a stock that has gone from under $5.00 two weeks ago to just under $16.00 today? I call it a no-public-float-so-a- little-buying-makes-it-scream-for-no-reason-and-is-poised-to-drop situation.
I have nothing against LiveDeal, Inc. (NASDAQ – LIVE - $13.80). But, with a float that is under 800,000, I have been amazed watching it go higher, and higher, with no end in sight. Right now it is around 10x trailing-twelve month revenue so the valuation is definitely reaching an unsustainable level. Moreover, after a while, investors get hip to the story, which is a good one. I just question the market valuation.
LIVE delivers local customer acquisition services for small and medium-sized businesses. It provides online marketing Internet directory services. The company offers InstantProfile, which distributes small businesses key contact and service information to Internet destinations, including the search engines, Internet directories, and social media networks that enable advertisers to manage their business information in one location and enhance their reach to various destinations a consumer may search for local business services.
Proceed with caution on this puppy. With such a low float, even a nominal decrease in volume could have a deleterious effect. My guess is the stock is under $10 before the July 4th holiday.
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