What happened
Shares of LivePerson (LPSN 11.66%) fell 21.4% in February, according to data from S&P Global Market Intelligence, despite receiving a major boost to kick off the month on its announcement it was upgrading its customer engagement platform software to include generative artificial intelligence (AI) capabilities.
Because OpenAI's ChatGPT chatbot sparked renewed interest in AI following its release last November, many companies are suddenly infusing their services (and press releases) with references to it or similar technologies.
Image source: Getty Images.
So what
LivePerson said it would be including "generative capabilities" from OpenAI while enhancing its enterprise tools to allow companies to use generative AI models like ChatGPT to better engage with their customers.
The declaration sent LivePerson's stock soaring more than 20% higher, but it began falling the very next day and kept on tumbling throughout the month. Concerns about its upcoming earnings report have weighed on its shares.
LivePerson had guided for only a 1% to 4% increase in revenue for the quarter, which would be its slowest growth rate in seven years. It ended the month by announcing that rather than reporting results on March 1 as originally planned, it would delay the release for two weeks to give it a chance to "perform additional review and testing of revenue recognition" related to its acquisition of precision healthcare company WildHealth.
LivePerson clarified that revenue from WildHealth's participation in a Medicare demonstration program is going to be impacted due to Medicare suspending reimbursements to participants in November pending a governmental review.
Now what
Although LivePerson ended February on a down note, it has rebounded 17% in March after its stock was upgraded to a buy rating by Craig-Hallum analyst Jeff Van Rhee, who thought the sell-off related to the delayed earnings report was overdone. Van Rhee said the stock would likely be "a double-digit/mid-teens grower the next few years."
The analyst sees LivePerson being able to generate $90 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) for 2022, and could quite possibly exceed $100 million, making it "a highly attractive opportunity to become owners."
The market apparently agreed, as shares subsequently started off March by soaring 34% above the low point they hit. Shares are still well below where they began February.
LivePerson is now scheduled to release earnings next week and all eyes will be on whether the cloud-based chat support specialist can meet those expectations. So long as it does report results by then -- and it has since said it fully expects to -- there would be no penalty for an "untimely" filing.
