Limelight Networks currently holds 133.59
M in liabilities with Debt to Equity (D/E) ratio of 0.95, which is about average as compared to similar companies. The entity has a current ratio of 3.16, suggesting that it is liquid enough and is able to pay its financial obligations when due.
Volatility is a rate at which the price of Limelight Networks or any other equity instrument increases or decreases for a given set of returns. It is measured by calculating the standard deviation of the annualized returns over a given period of time and shows the range to which the price of Limelight Networks may increase or decrease. In other words, similar to Limelight's
beta indicator, it measures the risk of Limelight Networks and helps estimate the fluctuations that may happen in a short period of time. So if prices of Limelight Networks fluctuate rapidly in a short time span, it is termed to have high volatility, and if it swings slowly in a more extended period, it is understood to have low volatility. Please read more on our
technical analysis page.
How important is Limelight Networks's Liquidity
Limelight Networks
financial leverage refers to using borrowed capital as a funding source to finance Limelight Networks ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Limelight Networks financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Limelight Networks' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Limelight Networks' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Limelight Networks's total debt and its cash.
Breaking it down a bit more
The latest price climb of Limelight Networks may encourage sophisticated investors to take a closer look at the firm as it is trading at a share price of
4.20 on
7,432,095 in trading volume. The company directors and management may have good odds in positioning the firm resources to exploit market volatility in
February. The stock standard deviation of daily returns for 90 days investing horizon is currently 3.59. The above-average risk is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from Limelight Networks partners.
Our take on today Limelight Networks climb
Latest maximum drawdown is at 15.67. Limelight Networks shows above-average downside volatility for the selected time horizon. We advise investors to inspect Limelight Networks further and ensure that all market timing and asset allocation strategies are consistent with the estimation of Limelight Networks future alpha. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Limelight Networks' stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Limelight Networks' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.
Limelight Networks Implied Volatility
Limelight Networks' implied volatility exposes the market's sentiment of Limelight Networks stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Limelight Networks' implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Limelight Networks stock will not fluctuate a lot when Limelight Networks' options are near their expiration.
Our Conclusion on Limelight Networks
While many of the other players under the software—infrastructure industry are still a bit expensive, Limelight Networks may offer a potential longer-term growth to sophisticated investors. With a relatively neutral outlook on the latest economy, it is better to hold off any trading of Limelight as the current risk-reward utility is not appealing enough. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Limelight Networks.
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Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Limelight Networks. Please refer to our
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