February 5, 2014
LiveDeal Undervalued Compared to Peers
Coupons.com and RetailMeNot valuations illustrate huge upside to LIVE
Coupons.com, Inc. filed its S-1 with the SEC on January 31 as it seeks to raise up to $100 million in its initial public offering. The company had a $1 billion valuation in 2011 and it wouldn’t be hard to imagine that figure being equaled (or topped) with the IPO, given that rival RetailMeNot Inc. (NASDAQ –SALE - $32.14) has a current market cap of $1.8 billion. All things considered, it shows the love that Wall Street has for deal related companies, especially given the fact the Coupons.com lost $12.8 million in the first nine months of 2013 on an average of $38 million in sales per quarter.
By comparison, one could argue that LiveDeal, Inc. (NASDAQ – LIVE - $17.15 - NR) is a steal with its valuation of only $65 million as of the close on February 4.
Led by visionary entrepreneurs that were the first to bring the print yellow pages to the Internet in 1994, the original company capitalized on that space, then moved on to be a leader in the online classified business before becoming LiveDeal with its new approach using geo-location services to more efficiently connect merchants with local customers. Clearly, management knows how to capitalize on Online trends.
LIVE has effectively re-engineered the daily deal engine with LiveDeal.com, a first-in-class website providing restaurants with real-time customer acquisition services unlike any competitor can offer. Through LIVE’s wholly-owned subsidiary, Velocity Local Inc., LiveDeal also provides a suite of products that include Search Engine Marketing and Business Syndication, amongst other leading technologies for clients to reach target demographics.
LIVE has done it again with another industry first. On January 30, the company launched DealCentral, the world’s first online deal portal allowing restaurants to instantly create, modify and publish offers to nearby potential customers in one central place. This central hub gives restaurants the ultimate control of their deal offerings to most effectively manage guest traffic, whether it is recurring preset specials or a “spur of the moment” deal meant to drive traffic instantly.
No one else offers this type of intuitive, comprehensive real-time deal management. No one. That’s precisely why restaurants are signing-up in dramatic fashion to use the LIVE platform. From small, local establishments to household brands like Olive Garden, Hooters and Outback Steakhouse, LiveDeal has quickly built an impressive list of users since its initial launch in select markets only a few months ago. The numbers don’t lie. LiveDeal already caters to more than 1,000 restaurants in the San Diego area, or about 20% of the market. LiveDeal launched in LA a little over a month ago and already curates deals for hundreds of restaurants. To put this growth into perspective, consider that Groupon has less than 100 clients combined between the two markets.
As the new kid on the block, LIVE is making waves in the daily deal space that Wall Street has really taken notice of since the first of the year, sending shares upwards by about 550 percent at a January high of $25.73. A small consolidation has shares back to $19 per share, presenting a unique opportunity to take a look at LiveDeal, Inc. (LIVE) while it still trades at a tremendous discount to its peers. To its favor, LIVE is likely to benefit with the Coupons.com IPO putting a bright spotlight on the industry as investment deal-seekers look for others in the industry that can offer more upside potential.
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Senior Analyst: Robert Goldman
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