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Stormy Waters for Our Flagship

Lionbridge is the world’s largest language service provider, with the company’s stock traded at NASDAQ. As a flagship of the translation industry, Lionbridge stock may be considered an important indicator of the entire industry performance. The bad news is that the current trend for Lionbridge is clearly bearish.

Lionbridge’s shares have already lost 25.75% year-to-date. This means that an individual who invested $10,000 in Lionbridge on December 31, 2010 and continues to hold them has reduced their investment to about $7,500. Meanwhile, the NASDAQ Composite index (which is a benchmark for investors who compare their stock performance against this general index) is showing much better performance, decreasing by just 6.86% YTD.

Alarmingly, the decrease continues despite the recent quarterly report, which proved to be quite positive: 14% revenue growth in the quarter 2 of 2011 and expected strength in the second half of 2011.

What are the possible reasons for a strong downward trend for Lionbridge?

  1. The investors might be actively selling these shares, because the U.S. economy is slowing down and the second wave of the recession might be ahead. The lower performance compared to the NASDAQ Composite index could be caused by the fact that the investors consider investing funds in an LSP less safe than putting money in other industries in these turbulent times.
  2. Because Lionbridge is the flagship of the translation industry, the bearish trend might be a sign of problems within the entire industry. Perhaps, the investors feel that the industry has little or no growth potential and prefer to sell their shares to avoid further loss.
  3. Another potential reason is the internal company problems.

If the reason 2 is true, this is sad news. It might be a good idea to closely monitor Lionbridge stock price in the future, as their performance might reflect an outlook for the entire industry. Anyway, let’s hope that Lionbridge stock will recover and achieve new heights, thus signifying a new upward move for our industry.

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About the Author

Roman Mironov
Roman Mironov
CEO & Founder

As the founder of Velior, Roman has had the privilege of being able to turn his passion for languages into a business. He has over 15 years of experience in the translation industry. Roman has helped dozens of clients increase sales by making their products appealing for speakers of other languages.