One of the worst performers on the local market today has been the LiveHire Ltd (ASX: LVH) share price.
In late morning trade the talent technology company's shares are down over 11% to 68 cents.
This latest decline means that LiveHire's shares have now lost almost half of their value in 2018.
Why are its shares crashing lower today?
This morning LiveHire provided the market with its latest quarterly update which revealed a surprise decline in cash receipts.
According to the release, cash receipts for the quarter were $454,000, down 16% on the previous quarter. Management blamed the decline on the timing of payment cycles and the migration of some existing clients to upfront 12-month contracts.
In light of this decline, cash receipts for the first three quarters of FY 2018 now stands at $1.4 million, up 141% on the prior corresponding period.
As a comparison, at the end of the first-half LiveHire's cash receipts were up 183% on the prior corresponding period to $984,980.
While its year-to-date growth may be strong, shareholders don't appear to believe it has been strong enough to warrant such a lofty market valuation.
Prior to today, based on its 260.9 million shares outstanding, LiveHire had a market capitalisation of approximately $198 million.
Why have investors been paying such a premium?
Management has previously advised that it estimates that the market opportunity for the company in Australia alone is worth $330 million. Outside Australia, the opportunity grows into the billions.
This huge market opportunity and the growing popularity of its product had many investors believing that LiveHire could grow significantly in the future. But as we have seen from its cash receipts, it has thus far failed to generate any meaningful revenues.
Unfortunately, I'm not convinced that the company will ever be able to generate the levels of revenue that would justify a $200 million market capitalisation.
Because of this, I would suggest investors stay away from LiveHire and consider tech companies that are generating sizeable revenues such as ELMO Software Ltd (ASX: ELO) or Gentrack Group Ltd (ASX: GTK).
