On June 18 daily-deals site LiveDeal (LIVE) saw shares rise 13 percent in a single trading session on the back of another press release from the company touting another supposed milestone. But as the MO for LiveDeal, the press release’s content is highly questionable and appears to be designed to give a false sense of hope to investors who have bet on a company built on both manufactured traffic and an apparently fraudulent client base.
A 400 Percent Increase... From When Exactly?
This press release in question touts a supposed five-fold increase in restaurant sign-ups to its platform “over the last several months.” The lack of details on that exact timeline, or how that number was calculated exactly, is telling.
But there are further indications that rather than just being a case of selectivity bias, LiveDeal might be inventing a lot of their client base from whole cloth. An anonymous investigatory group calling itself the Fraud Research Institute claims that they called 10 restaurants that LiveDeal said were using their platform. Zero of the businesses were even aware of LiveDeal’s existence.
It’s likely because LiveDeal appears to be possibly adding businesses to their roster without notifying the business they have done so. A tweet posted by Fraud Research indicated that according to LiveDeal’s email confirmations, LiveDeal “is not affiliated with the merchant in any way (…) Terms and existence of the deal itself are subject to changes by the merchant. LiveDeal makes no warranty relating to the deal, including without limitation existence of the deal itself.”
LiveDeal is selling deals that might not even exist. Pretty hard to lose money doing that.
“Subject to Change or Denial”
A perusal of their terms of service does little to bolster the case that a LiveDeal deal will be honored at all. Under “Deal Information,” the company reminds customers that “unless specifically stated in an offer, all deals and promotions are subject to change or denial by the offering merchant.”
Even the terms of service are presented in an intentionally confusing fashion. This is an unaltered screenshot of the terms of service:
The text is intentionally hard to read and then just kind of trails off. Why? To confuse customers and further deter them from figuring out that deals bought through the site have a chance of not being worth anything at all.
At Least 39 Percent of the Traffic is Probably Paid For
The product that LiveDeal purports to sell – deals on restauraunts – looks problematic. But LiveDeal is a website, and boosted traffic should prove that despite the assertions of skeptics, their site is as popular as they claim.
In a release put out by their PR arm Stock Market Media Group in February, LiveDeal touted a “154 percent increase in web traffic” for their company from December 2013 to January 2014. At the time, 35 percent of that LiveDeal web traffic was coming, strangely, from India.
Which made little sense for a company offering deals solely in the US. That is, unless the traffic was the product of click farms, or freelancers paid to make a website’s traffic look more robust than it actually is. Which makes a lot more sense than a daily deals site suddenly becoming insanely popular with a group of people who have zero chance of redeeming those deals.
So what’s changed since January? Six months later, the traffic from India has actually increased, to now comprise 39 percent of all its web visitors.
LiveDeal is selling deals for businesses that may or may not be aware of their existence, deals that may or may not be actually honored, all while pumping their own company by releasing reports touting web traffic coming from clickfarms halfway around the world.
All from a company that still fails to turn a profit. But these things matter not for the scores of stockholders still going long on this highly questionable investment that shows signs of plummeting then invariably recovers. Buyers excited by the supposed 400 percent increase in signups sent the company’s shares up 13.33 percent to hit $4.28 a share.
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