Crossroads for LifeLock: Value vs. Giving Up


LifeLock Inc. (NYSE: LOCK) has continued to be a poor and disappointing initial public offering. Last week it looked as though investors were willing to try to make a stand by buying shares but the gains were short-lived.

The identity theft solutions company is still spending aggressively on advertising and marketing to the point that the breakeven time of about eighteen months of revenues is just too long for most investors to accept.

LifeLock has a promising business model, at least on the surface. It serves an important role as there are millions upon millions of consumers who are worried about identity theft. The problem is that even though it identity theft can ruin lives and in many cases it is the theft that can keep on stealing, its expense structure is still too high.

After a $9.00 IPO pricing, shares have closed lower and lower almost daily and the days where shares rose was on light trading volume. We have only seen two real up days and the stock hit a new low of $6.93 today versus a prior low of $7.12.

Investors tried to step up to the plate last week. After some point, even bottom-fishers looking to pick off oversold IPOs start to give up. LifeLock now looks like it is in the running for the worst performing IPO of recent weeks and months now that shares are down about 22% from the IPO price.