Pandemic high to deep decline: How LivePerson’s valuation dropped from $4.7B to $60M
Pandemic high to deep decline: How LivePerson’s valuation dropped from $4.7B to $60M
Once seen as a transformative solution for customer service, LivePerson now contends with fierce competition and a shifting market landscape.
LivePerson is struggling to meet investors' expectations. The American company, which develops customer service technologies, continues to report declining revenues and significant losses, as reflected in its quarterly report published late last week.
Following these results, LivePerson's shares plunged 23% in Tel Aviv on Sunday, reaching a new low valuation of NIS 234 million (approximately $62.8M). This marks a dramatic drop from just three and a half years ago, when it traded at a value of over NIS 16 billion ($4.7 billion). Year-to-date, LivePerson’s stock has fallen by 68.5%, while the S&P 500 index has risen by 24.5% over the same period. Since its peak, LivePerson’s stock has plummeted by 98.5%.
LivePerson, which also has a development center in Israel, is dual-listed on NASDAQ and the Tel Aviv Stock Exchange. At its peak, and until 2022, LivePerson was even part of the Tel Aviv 35 index.
The company's core product uses artificial intelligence-based bots to convert voice calls into messages. However, despite the intense focus on the AI industry, LivePerson has struggled to leverage this technology for revenue growth. In the third quarter of this year, the company’s revenues decreased by 26% year-over-year, totaling $74.2 million. This marks the fourth consecutive quarter of declining revenue.
On the bottom line, LivePerson managed to narrow its loss to $28.3 million from $53.3 million in the same quarter last year. This reduction in losses is partly due to an aggressive restructuring effort undertaken last year, aimed at lowering operating expenses.
LivePerson was founded in the U.S. nearly 30 years ago and went public on NASDAQ in 2000, just before the dot-com bubble burst, at an initial price of $8 per share. In 2011, it also listed on the Tel Aviv Stock Exchange. During the pandemic, it attracted significant interest from investors and reached a record-high share price of $70. Investors believed that reduced staffing in customer service centers would create strong demand for the company’s solutions. However, since then, the impact of the pandemic has waned, and competition from other tech giants has intensified.
At the beginning of this year, founder Robert LoCascio departed from the company. His exit has been linked to the influence of the activist fund Starboard Value, which increased its stake to nearly 10% in March 2023 and has since pressured the company to change its practices.
Starboard argued in a letter that LivePerson’s poor stock performance was not due to market conditions but to issues with company leadership. Additionally, Starboard criticized LivePerson’s board, citing a lack of gender diversity and low turnover, with most directors serving for 13 years, resulting in stagnation at the company.
