Is LivePerson Stock A Buy?

Considering how many companies have been making the switch to online retail, even prior to the onset and subsequent spread of the coronavirus that rendered in-person shopping much more difficult than ever before, it’s easy to see why the customer service industry quickly found itself overwhelmed at the sheer number of people seeking assistance while online shopping. This is where LivePerson comes into the picture.

LivePerson is a publicly traded global technology company that excels at conversational commerce and AI software development.

Most notably, LivePerson is responsible for the advent of the Conversational Cloud, which allows online consumers to direct message with brands in real time through the use of artificially intelligent chatbots alongside human customer service representatives.

Because of LivePerson’s impact on the way customer service is done today, it’s understandable that LivePerson stock would be sought out by many retail investors and traders. But is LivePerson stock a buy, or is it simply a popular investment that will fizzle? 

LivePerson Financials

While shares in LivePerson (LPSN) have been a hot commodity as of late, the truth is that the company has been publicly traded since April of 2000 — well over 21 years now.

LivePerson’s latest quarterly results are proof that this company has been on the up-and-up for a lot longer than just the past couple of years, and it’s quite possible that this company will continue to be so for many quarters to come.

For LivePerson’s second quarter of 2021, which came to a close on June 30th, the company exceeded financial analysts’ estimates with a record-breaking revenue of $119.6 million — an increase of 31% year-over-year. This is the company’s fifth quarter in a row where growth exceeded 25% or more.

Business operations revenue also increased 31% year-over-year, reaching $109.8 million for the quarter. Additionally, the company brought in or renewed 105 customer contracts, four of which were in the seven-figure range. All of this bodes extremely well for LivePerson shareholders, to be sure.

LivePerson’s Stock Price Forecast

Looking toward the future of LivePerson and the quarters to come for the company, higher-ups within LivePerson anticipate at least 27% growth in the year 2022.

This anticipated growth is reflected quite nicely in LivePerson’s stock price forecast, which bullish investors see reaching $85 per share over the next 12 months.

On the lower end, some less optimistic analysts only see LivePerson stock reaching $60 over the same period of time. 

A discounted cash flow forecast analysis for LivePerson reveals an LPSN share price estimate of $74 per share.

LivePerson’s Recent Acquisitions

While LivePerson has long been known for its own software development and offerings, the company has also been characterized by its series of acquisitions over the years.

From the purchase of real-time online customer service company HumanClick in 2000 to the acquisition of video chat and co-browsing company Synchronite in 2014 to the purchase of conversational AI developer e-bot7, which was just announced recently by LivePerson, the company has absorbed over a dozen different brands over the course of LivePerson’s 26-year-long history.

The firm’s willingness to spend money on the purchases of other competitors and start-ups shows that LivePerson is committed to growing by any means necessary. Not only do these acquisitions make LivePerson better as a company, they also help the company narrow the playing field quite a bit. The consensus is that these recent acquisitions will only help LivePerson grow stronger over time.

Indirect Sales Initiatives for LivePerson

Another way that LivePerson has worked hard to increase its revenue and bring in new customer contracts is through indirect sales initiatives. This involves the help of a third party or affiliate brand to promote or direct new customers toward LivePerson without as much effort on LivePerson’s end to actually bring those customers in on its own.

LivePerson is lucky enough to boast partnerships with both Adobe (ADBE) and Google (GOOG), among others, that help the company with its indirect sales initiatives.

In LivePerson’s most recent quarter, 27% of bookings were driven by the company’s indirect sales initiatives. Looking forward to future quarters, the company hopes to move this percentage closer to 50%.

LivePerson’s Recent Payment Solution Launch

Lately, LivePerson has talked about the launch of a payment solution that simplify payments through its platform and software.

While there still hasn’t been much attention paid to it yet, the implementation of a payment solution to the pre-existing LivePerson software will likely end up faring positively for the company in the future — it’s a move that will definitely further streamline LivePerson’s user experience, which is always a huge plus for any company (especially companies like LivePerson, who is already seeing great success with its user experience as-is).

CEO Rob LoCascio discussed the payment solution being in revenue right now during the company’s second quarter call, stating that it’s currently out on the market with several other enterprise customers but that the company hasn’t given much guidance on it yet.

As this payment solution continues to grow, investors can expect to hear more about it in future LivePerson quarterly reports.

LivePerson’s Market Share

Presently, LivePerson has an estimated market share of 9% in the live chat market. The company is bested only by Tawk.to (with a market share of an estimated 16.7%) and Zendesk Chat (with an estimated 31.6%).

While these competitors are undoubtedly controlling more of the live chat market, LivePerson is by no means struggling to keep up.

The company is successful in its own right, and, judging by the consistent and dependable growth the company has shown over the past handful of quarters, it wouldn’t be surprising to see LivePerson’s market share increase in the very near future.

It’s a waiting game, to be sure, but one that’s undoubtedly worth playing.

The Bottom Line: Is LivePerson Stock a Buy?

After analyzing LivePerson from various angles, looking at the company’s financials, its stock price forecast, its recent successes, and how it stacks up against the competition, it’s time to make the call: Is LivePerson stock a buy?

Judging by the company’s excellent quarterly reports as of late, its superb stock price forecast over the next 12 months, its successful string of acquisitions, its lucrative indirect sales, and its prospering payment solution launch, there’s no question that LivePerson stock is worth the attention of retail investors and traders.

Even if the company’s price per share only rises to the median estimate of $76 by this time next year, that’s still an increase in price of nearly $20 between then and now. What’s more, very few — if any — financial analysts predict to see LivePerson taking a turn for the worst in the coming year.

Even if the company’s price per share rises only to $60 over the next 12 months, the increase in price from current levels still represents a reasonable return. It’s apparent that LivePerson stock is not simply a trendy purchase — it’s something retail investors and traders can depend on as a part of their portfolio for years to come.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.