LiveOne Partners with Tesla; Lowers Revenue Guidance

In a recent report, LiveOne, Inc. announced a new partnership with Tesla, which includes a significant shift in service delivery for Tesla users. However, the company concurrently lowered its revenue guidance for fiscal 2025, signaling potential short-term financial challenges amidst growth ambitions.

Date: 07-10-2024

AI Rating: 5

Earnings Guidance Impact: LiveOne has lowered its guidance for consolidated fiscal 2025 revenues from $140 million-$155 million to $120 million-$135 million, reflecting a negative sentiment that could lead to downward pressure on stock prices. This marks a revision of expectations, typically viewed unfavorably by investors.

EBITDA Adjustments: The company has also adjusted its EBITDA forecast downwards from a range of $16 million-$20 million to a new range of $8 million-$15 million. This signals increased costs or lower profitability than initially anticipated, which might turn investors cautious due to the potential decline in operating margins.

Revenue Growth: Despite the lowered revenue guidance, LiveOne reported first-quarter fiscal 2025 revenues of $33.1 million, marking a 19% increase year over year, driven mainly by the Audio Division's growth. This can be seen as a positive indicator of operational capability, yet investors may interpret the revenue increase alongside the revised guidance with skepticism.

B2B Expansion: LiveOne is focusing on expanding its B2B partnerships, having secured a $24 million contract projected to generate $2 million in monthly revenue. While this development could enhance revenues and strengthen its market position, investors need to consider whether this growth trajectory aligns effectively with the upcoming losses due to the restructuring of its partnership with Tesla.

Overall Performance: LiveOne currently holds a Zacks Rank #3 (Hold), indicating a potential shift in investor sentiment, particularly given a price decline of 32% over the past year. This performance against a generally positive industry backdrop (11.2% growth in its sub-industry) may lead to a careful re-evaluation of investment strategies regarding LVO stock.

Stocks: LVO TSLA