Opinions
David Burrows
Lightspeed Commerce Inc.
LSPD-N
Unspecified
Feb 27, 2023
N/A
Stock price when the opinion was issued
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BUY
A Montreal fintech company that has now listed on the Nasdaq. It soared to the $80s last February then fell to $55ish by mid-May as tech fell out of favour. But now they're back in fashion, so LSPD has soared to $85. Its recent quarter saw 127% revenue growth from subscriptions but also through lots of acquisitions.
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COMMENT
The stock went straight up after its IPO and it used its highly valued paper to make many acquisitions. But the market changed, the stock went way down and acquisitions would have to be made with much less share value. There was an expectation that it might be the next Shopify but this didn't happen. They're now keeping the balance sheet OK and doing a strategic review since the company might be sold. It has a premium because of that possibility.
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It is part of a common theme - a lot of tech related higher multiple stocks are in for tougher times. We had a long tech cycle which fell substantially last year. The sector has had a nice bounce this year but has some proving to do. With yields on 10 and 30 year bonds ticking higher it becomes less attractive for investors to pay for higher multiples. Also many people have bought at higher prices and are anxious to sell if it moves higher to get some or all of their money back. This type of investor has to be cleared out before a sustained rally.