Limelight Networks - Full Moon
Seeking Alpha Analyst Since 2019
Former WSJ and II ranked sell-side analyst covering special situations and TMT.
- Yesterday AMZN launched Luna, a cloud-based gaming platform catering to the millions worldwide staying at home looking for entertainment.
- AMZN is already LLNW's largest customer. In recent presentations, LLNW CSO and former CFO Maljotra indicated there is a very large customer (outsize) in the works that marketing will announce.
- There has been speculation on this win ranging from ORCL, MSFT and AMZN live. All could work in our view.
- With a global low latency video CDN that already serves gaming companies, the writing is on the wall that AMZN Luna may be the big ticket in the works.
- LLNW at 3x sales trades at a deep discount to CDN peers AKAM, FSLY, NET whose multiples range from 10x-30x. The gap is absurd in our view. LLNW's chosen niche of OTT video and gaming now boosted by edge computing is an ideal engine for growth in today's stay at home world. The AMZN Luna launch will further boost top line numbers for LLNW. Recent movie delays by customer DIS, which may have pressured the stock this week, will jack 2021 forecasts and be supplemented by AMZN Luna gaming growth. Further, last week's Peacock deal with ROKU will accrue to LLNW given those companies are both customers - yet investors seem to have missed this upside. NET/NET: We reiterate our STRONG BUY recommendation and $16 target on LLNW, which is 10x high-end Street top line of $240MM.
LLNW Cap Table @ $5.68
LLNW Cap Table @ 10x 2020E Sales
AMZN Luna Launch 09-24-2020
Introducing Luna-Amazon's New Cloud Gaming Service Where it's Easy to Play on the Devices You Already Own | Amazon.com, Inc. - Press Room
LLNW Sample Customer List
Customer Base | Limelight Networks
Last year LLNW announced its 3Q earnings date on September 16. In anticipation of an earnings date release imminently, look for another beat and raise from LLNW. CSO Maljotra (former CFO) indicated on his five Wall Street pitches this month that the Company discounts the sales funnel by 70% and is comfortable in the mid point to above going forward. If the stock stays at current deep relative discount levels, considering upside to forecasts as discussed above, we believe the Company will be taken out in the double digits.
Analyst's Disclosure: I am/we are long llnw.
We intend to provide additional commentary in our ongoing coverage of LLNW.
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