What’s the big deal about Lightspeed Commerce shares?

Jonathan Smith looks at the strong gains in Lightspeed Commerce shares since the IPO, but also the recent bearish report published.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Question mark on post-it notes

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

Lightspeed Commerce (NYSE:LSPD) is a Canadian technology company. Since going public back in early 2019 at US$16 a share, the price has rocketed higher. Over the past year, Lightspeed Commerce shares are up 124%. From the IPO level, investors would be up almost 500% in just a few years. As a UK-based investor, should I get involved?

The backstory

Lightspeed Commerce is an e-commerce software provider. It offers a broad range of software, ranging from accounting, marketing, point-of-sale and analytic tools. This makes it easy for a business to sign up and benefit from multiple different products from the same provider.

The company concept isn’t something particularly new. Yet I think the fact that it’s seen as a one-stop-shop for businesses makes it appealing for investors. 

So far, Lightspeed Commerce shares have benefited from the firm’s strong financial results. Back in August, the results for the second quarter showed very strong year-on-year growth. Total revenue came in at US$115.9m, up 220% versus the same period last year. Like many technology companies that are trying to reach scale, it did post a loss. But the adjusted net loss of US$6.9m was a slight improvement on the previous year.

A short-term crash

With all of this growth, the company has been in the news recently for the wrong reasons. In late September, Lightspeed Commerce shares fell by 14% at one point during a day. The main reason for this crash was the release of a negative report from fund manager Spruce Point Capital. 

The report was made after “conducting a forensic financial and accounting review”, the company stated. Some damning conclusions were that the company massively overstated the business pre-IPO, as well as having a “questionable CFO tied to a prior technology scandal”.

As a result, Spruce Point Capital thinks Lightspeed Commerce shares could fall by 60%-80% in value over the long term.

Bearish reports from funds that will benefit if the share price falls aren’t new. I recently wrote about another stock dropping from a similar bearish report. From my point of view, just because the report was published doesn’t mean everything in it is true. I need to take the statements with a pinch of salt, and do my own research before deciding what to do.

Where do Lightspeed Commerce shares go from here?

Over the past five days, the share price is down 12%. It’ll be interesting to see whether the bulls or bears win out here. There’s clearly a lot of investor optimism that has driven the price higher since the IPO. The report could be a blip, with the dip an attractive buying opportunity. 

Yet if the statements in the report are well-founded, then things could unravel quickly. Either way, I think we’ll find out pretty soon. Therefore, I’d rather sit on the sidelines here and wait for more information to come out before I can make an informed decision.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Jonathansmith1 has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended Lightspeed POS Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Businessman with tablet, waiting at the train station platform
Investing Articles

I’m up 85% on this FTSE 100 dividend stock but I’m not selling any time soon

Investing in this FTSE 100 company for the long term has really paid off for Edward Sheldon. He has seen…

Read more »

Happy woman commuting on a train and checking her mobile phone while using headphones
Investing Articles

Here’s how an investor could start a Stocks & Shares ISA tomorrow and aim for £2.1m by 2055

The Stocks and Shares ISA is an incredible vehicle for building wealth. Dr James Fox explains the strategy to go…

Read more »

Businessman hand stacking up arrow on wooden block cubes
Investing Articles

Diageo shares: here’s the latest dividend and price forecast

Diageo shares have been among the FTSE 100's poorest performers in recent times. Could the drinks giant be about to…

Read more »

Thoughtful man using his phone while riding on a train and looking through the window
Investing Articles

Up another 6% in the last week! Is the BP share price ready to go gangbusters?

The BP share price has been on fire lately. Harvey Jones looks at what's driving the FTSE 100 stock's recovery,…

Read more »

Businessman using pen drawing line for increasing arrow from 2024 to 2025
Investing Articles

High-flying IAG shares are up 50% in 3 months but I still think they’re too cheap to ignore!

Timing the market is almost impossible but Harvey Jones managed it when buying IAG shares in April. Can the FTSE…

Read more »

ISA coins
Investing Articles

Want to earn £1k+ in annual passive income from a £20k Stocks and Shares ISA? Consider this!

Our writer sets out some points to consider when trying to target a four-figure income from one year's Stocks and…

Read more »

Rolls-Royce's Pearl 10X engine series
Investing Articles

3 risks to the Rolls-Royce share price, after its 979% climb

After a 979% growth in the Rolls-Royce share price, our writer still sees things to like in the business. But…

Read more »

Buffett at the BRK AGM
Investing Articles

Can Warren Buffett principles help when looking for AI stocks to buy?

Billionaire Warren Buffett has made a fortune by applying old investing principles to new industries. Can our writer learn some…

Read more »