Liquidity Services, Inc. (NASDAQ:LQDT) released its quarterly report this past month. The report was not optimistic and admitted that the company was in no position to predict its short term future. Worsening the scenario was the admission that its long term future depended on many externalities like increasing brand awareness. The company’s gross merchandise volume decreased by 24% from the prior year’s quarter which is a significant decrease in the business of surplus sale business where margins are quite low.
The report announces an income of $2 million but it also says that the net GAAP less of $43.7 million for Q4 2015 and overall loss of $104.8 million in FY-15. The company’s goodwill has also taken a big hit and it is clear that the company is not in good shape. There have also been reports of the company’s directors selling significant portions of their holdings in the company at a time when the shares are trading over 33% down from its one year high of $11.00.
The analyst consensus seems to be between sell and hold. The bleak outlook of the company’s future as admitted in the quarterly report, to be fair the company has not performed as bad as was expected in the last quarter but share prices are largely dependent on sentiments and a cautious look for the upcoming fiscal year is not the biggest confidence booster.
At this point it is difficult to be positive about the sock value of the company given that the company has itself admitted that it does not know what holds in future for them, there can be short rallies or blips based on buyers looking to make a quick profit or in the belief that the prices are competitive due to being at a year’s low however buying shares of Liquidity Services, Inc. (NASDAQ:LQDT) is a risky bet.