Live Ventures Inc (NASDAQ:LIVE) ­is having a pretty rough ride this week. A hit piece on Seeking Alpha has sought to paint the company as a scam, and one that is deliberately misleading investors and potential investors, and this has translated to some decidedly negative sentiment.

As we all know, however, there are two sides to every stock market story. The piece in question outline some valid concerns, but also pounced upon some seemingly invalid points, and used these to form the backbone of a short bias. In light of the sentiment shift (Live was running up ahead of the article’s release) let’s try and figure out where things stand, and put together a bias for the company going forward into 2017.

Live Ventures is a holding company with a host of subsidiaries acting in the online retail and commerce space. It has four main businesses as things stand: a deal engine called LiveDeal, two consumer products retailers, ModernEveryday and Marquis Industries, and, by way of its most recent acquisition, an entertainment superstore chain called Vintage Stock.

The company just put out its financials for fiscal year-end (YE) 2016, reporting just short of $79 million in revenues, an increase of 136% over the same period in 2015. Net profit came in at $17.8 million, representing earnings per share (EPS) of $8.92. One of the focus points of the Seeking Alpha short piece was these two numbers. Specifically, that the $19 million was recorded as income on the company’s 2016 financials, but was not related to operations. Instead, $4.6 million was attributed to a purchase gain on acquisition (related to the Vintage Stock acquisition) and $12.5 million was attributed to a change in deferred tax expense. A couple of other attributions, vendor and note settlements and a gain on asset sales, made up the remainder of the $19 million. Without these items, the company would’ve lost somewhere in the region of $1.2 million.

Admittedly, these are somewhat arbitrary, and while probably justifiable if the accounting department was ever asked to back up their statements, they probably shouldn’t be factored into a retail investor’s valuation of the company’s prospects. For us, however, this doesn’t amount to a scam – as the Seeking Alpha author is attempting to suggest. While it’s not great, a $1.2 million net loss on $60 million annual revenues (removing the $19 million from the full-year equation) is far from worthless. A couple of cost saving efforts here and there, and Live Ventures could be pulling in a positive bottom line on its day-to-day operations.

Another core focus of the short piece was the promotional activity undertaken by Live Ventures during 2016. Reportedly, the company spent close to $1.9 million on investor relations. In many cases, this is a red flag. In this instance, however, that isn’t necessarily the case. This is a real company, generating real revenues, through real operations. Companies at this end of the market (Live Ventures is valued at a little over $54 million at last count) conduct investor relations activity on a regular basis – they need to in order to raise capital. It isn’t always a red flag, and we believe that, in this instance, while the amount spent on promotional activity seems a little excessive, it is purely an awareness campaign. Live is growing, and growing fast, and it needs to bring on board additional retail capital to help it meet the cost of its expansion. Investor relations output helps it meet this goal.

It is of course, not without its risks. Cash on hand is less than $1 million at last count, while long-term debt sits at close to $14 million. That’s not a great ratio, whichever way you look at it. Total assets, come in at a little over $53.4 million, however, which takes some of the sting out of the debt side of the equation. Of these assets, inventory accounts for the largest portion, coming in at $11 million at September 30.

As such, chances are, we will see some degree of dilution near-term to improve the company’s balance sheet.

With that said, and whatever the shorts think of this one, there is an underlying and growing business in Live Ventures, and plenty of growth potential to boot. Management clearly agrees, with the CEO having just bought more than $250,000 worth of shares on the open market in an attempt to counter the sentiment shift induced by the Seeking Alpha article.

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Disclosure: We have no position in LIVE and have not been compensated for this article.