Written by ι Stock Market Media Group Staff — January 24, 2014
LiveDeal, Inc. (NASDAQ: LIVE) has been on such a ride this month that many investors have only been able to watch its progress from the sidelines. Well, the company’s announcement this week of a 3 for 1 forward stock split may be just what the market needed to invite more investors to share in the LiveDeal story as it continues to unfold. Since the company’s www.livedeal.com instant deal platform started rolling out in the fourth quarter of 2013, investors began taking note of the stock, and with its growth, the stock exploded leaving many retail investors behind.
LiveDeal, Inc. currently has a low tradable float around 1 million shares which has contributed to the dramatic price increase over the last month from around $3.50 to yesterday’s closing price of $17.00. The good news for investors is that with a 3 for 1 forward split, the company’s tradable float will remain very low. This will likely allow for continued strong price appreciation post-split especially given the exponential growth expected at LiveDeal.
The primary motivation behind a forward stock split is to make a company’s price more attractive to the average retail investor. In the process, a forward split makes more shares available to trade, and more shares should mean higher volume. LiveDeal could be primed for institutional buying and having higher volume means there is less impact on the price of the stock as institutions buy and sell.
LiveDeal is clearly growing more popular in the market, and that popularity is likely attributed to how well livedeal.com has caught on with restaurants. After all that’s what made this company’s story take off over the past month. LiveDeal is taking on multi-billion dollar deal giant Groupon in the dining industry in several major cities and they’re winning – overwhelmingly! Both retail investors and institutional buyers have to like how quickly LiveDeal has become a big deal in San Diego, Los Angeles and most recently San Francisco. The company has more than a thousand restaurants, including about 20 percent of all dining establishments in San Diego, promoting their businesses on its still very new platform.
Let’s face it forward stock splits are typically done because companies are performing well, and with LiveDeal’s low tradable float, there’s no better time to add to the structure than while you have huge momentum on your side and plenty of good news on the horizon.