Shares of global commerce company Liquidity Services, Inc. (LQDT) have gained 35% so far this year. LQDT provides a marketplace platform for surplus assets and inventory, powering the circular economy.
LQDT recently reported a robust set of fourth-quarter numbers on the back of strong demand from new and existing customers.
During the quarter, LQDT’s gross merchandise volume jumped 24% to $244.4 million, while revenue increased 26% to $70.3 million. Earnings per share increased by $0.03 to $0.26 over the prior-year period.
Furthermore, at the end of fiscal 2021, LQDT had ~4.03 million registered buyers, a 7% gain over the previous year.
With these developments in mind, let us take a look at the changes in LQDT’s key risk factors that investors should know.
According to the TipRanks Risk Factors tool, Liquidity Services’ top risk category is Legal & Regulatory, contributing 22% to the total 37 risks identified, which is higher than the sector average of 18%. In its recent annual report, the company has added three key risk factors.
Under the Legal & Regulatory risk category, LQDT noted that it is required to maintain the privacy and security of personal and business information. Any failure in data security could adversely impact LQDT’s business, reputation, expose the company to litigation and regulatory action, leading to substantial additional costs.
Additionally, under the Production risk category, LQDT highlighted the need to attract, train and retain qualified employees in its RSCG warehouses. Any loss of employees amid the present labor market trends induced by COVID-19, regulatory changes, and heightened business competition could adversely impact LQDT.
Meanwhile, under the Macro & Political risk category, the company conceded that its performance hinges on global and regional economic conditions. Any factors that reduce cross-border trade or make such trade difficult could negatively impact LQDT’s business. Increasing tariffs, trade wars, or travel restrictions amid the pandemic can adversely affect LQDT’s global business.
Hedge Fund Activity
TipRanks data points that Wall Street’s best hedge funds have increased holdings in Liquidity Services by 155.1 thousand shares in the last quarter, indicating a positive hedge fund confidence signal in the stock based on activities of 2 hedge funds in the recent quarter.
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