LivePerson (LPSN) Shares Plunge 13.41% on Mixed Institutional Sentiment, Valuation Concerns

LivePerson (LPSN) shares plunged 13.41% on Thursday, hitting a level not seen since June 2025, with an intraday drop of 24.77%. The selloff reflects a sharp reversal from recent momentum-driven gains, signaling heightened investor caution ahead of key strategic developments.

Analysts attribute the decline to mixed institutional sentiment and valuation concerns. Despite a Zacks Momentum Score of B and a beta of 1.61—highlighting its volatility relative to the market—investors are reevaluating the stock’s risk-reward profile. The company’s price-to-sales ratio of 0.39 remains attractive, but speculative traders appear to be exiting positions amid broader market corrections.

Institutional activity has been a double-edged sword for LPSN. While firms like Everence Capital and ExodusPoint Capital added to their holdings in late July, others have scaled back. Analyst ratings remain split, with Craig-Hallum and Roth Capital upgrading to "Buy" while Barclays issued a "Sell" rating, citing sustainability doubts. The leadership transition under interim CEO John Collins has drawn cautious optimism, though operational execution risks linger as founder Jeffrey LeCascio steps down.

Recent earnings performance provided temporary relief in July, with Q2 results surpassing revenue and profit estimates. The company’s AI-driven customer engagement platforms and e-commerce solutions fueled growth, earning recognition at the Digiday Awards and inclusion in Gartner’s Hype Cycle. However, these accolades have yet to translate into sustained investor confidence, as the stock remains vulnerable to sector-wide volatility.

LivePerson’s strategic focus on AI and real-time engagement positions it in a high-growth niche, but competition from larger tech players and narrow profit margins pose challenges. The stock’s high beta underscores its sensitivity to macroeconomic shifts, with analysts urging caution ahead of upcoming earnings reports and leadership stabilization. For now, the market appears to be pricing in uncertainty, leaving LPSN in a precarious position between momentum-driven optimism and valuation skepticism.