Liquidity Services (LQDT): The Hidden Winner in Internet Retail

If you think online auctions are just for collectibles and eBay (NASDAQ: EBAY) … then Liquidity Services (NASDAQ: LQDT) might surprise you. 

Not only is this an A-rated stock in our Zen Ratings system (and stocks with a Zen Rating of A had an average return of +32.52% per year) … but it’s also the #1 pick in the B-rated internet retail industry.

Why? It has to do with a quiet network effect that’s taking hold in a growing industry. Let’s take a closer look.  

LQDT’s Network Effect

LQDT is quietly building a digital auction empire for the real economy—surplus industrial assets, government vehicles, retail returns, and more. 

In other words: while eBay connects buyers with sneakers and vintage toys, LQDT connects buyers with forklifts, generators, and unsold consumer goods.

That difference matters, and it’s part of why Liquidity has quietly returned 564% since May 2020, vastly outperforming the broader market:

At the core of LQDT’s business is a powerful, underrated network effect. With over 5.5 million registered buyers across its marketplaces—GovDeals, Machinio, Capital Assets Group, and the Retail Supply Chain Group—LQDT is a rare case of a B2B platform that gains strength the more it grows, because: 

• Sellers want access to the most buyers. 
• Buyers want access to the widest inventory. 

LQDT delivers both, creating a flywheel that’s increasingly hard to disrupt.

eBay and LQDT are Playing a Different Game

eBay is often seen as the dominant player in online auctions, but it’s not even a direct competitor in this case. 

eBay serves mostly C2C and small sellers. LQDT, on the other hand, serves governments, Fortune 500s, and industrial giants, giving it a business model that’s more defensible and less cyclical.

That moat is starting to show up in the numbers:

• Revenue grew 72% year over year in the latest quarter.
• GMV (Gross Merchandise Volume) hit a record $386 million, up 26%.
• EPS doubled. ROIC is climbing.
• And unlike many high-growth tech stocks, LQDT is profitable, debt-light, and cash-rich.

Even better? The total addressable market is huge—over $130 billion by company estimates—and largely untapped. The shift toward reverse logistics, surplus recovery, and ESG-friendly resale isn’t going away. If anything, it's accelerating.

LQDT Fundamentals

To be fair, the stock isn’t dirt cheap. It scores a C according to our Zen Component Grades.

But with a long runway for growth, a strong balance sheet, and a tech-enabled platform that’s steadily widening its moat, LQDT could be a smart way to play the rise of the circular economy.

That’s why it scores an A for Growth … according to our assessment of profit margin improvements, free cash flow momentum, operating income growth, and more. Click here to see LQDT’s other Zen Rating Component Grades.

Another good thing about LQDT is that it sidesteps the most common errors we see with growth stock investing.

And it doesn’t hurt that the two top Wall Street analysts who cover the stock both rate it a Buy with plenty of upside:

Click here to see LQDT price predictions.

So whether or not LQDT becomes the “eBay of B2B,” it may already be one of the internet’s most valuable auction businesses most people have never heard of.

That’s why I’m keeping it on my watchlist. Click here to add it to your own.

Want to take a closer look at the sector? Click here to see our other top-screening Internet Retail stocks.

What to Do Next?

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• See All “A” Rated Stocks with +32.52% Average Annual Return >
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