Lightspeed POS Inc., (TSE:LSPD), is one stock that investors have been paying attention to recently. The stock has been a high-growth stock because of its focus on ecommerce and other channels. The company’s performance has been impressive.
Spruce point Management’s recent report has weakened the stock’s investment thesis. To determine the value of this growth stock, investors must now dig through all the data. It is never easy to tackle such a daunting task.
Let’s now look at Lightspeed’s allegations and see if there is any hope for investors.
This stock is not my favorite. (See Lightspeed stock charts on TipRanks)
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Crosshairs Lightspeed Stock
Spruce Point Management has released an extremely daunting and detailed report this past week on Lightspeed. Lightspeed’s financial security was highlighted when the firm issued a strongly negative Sell opinion.
An analyst may question Lightspeed’s hype given the stock’s recent performance. This short report seems to have done exactly that.
Spruce Point claims that Lightspeed doesn’t have accurate information about how many customers and revenue each company receives, or how it accounts for the high growth rates. Lightspeed is an extremely high growth stock in the payment solutions sector. This has led many investors to stop investing in it. Since the release of this report, LSPD stock dropped 25%.
This report highlights the possibility of margins being squeezed by competitive pressures. Spruce Point indicates that Lightspeed must eventually compete with Amazon (NASDAQ:) in order to keep growing at the rate it is. This stock may struggle to survive long-term under such intense competition.
Time will reveal how it all plays out. Investors are less positive about the stock, however. Investors looking to possibly build positions in Lightspeed might find a better entry point.
The question is: Will there be more downgrades? Are we in danger of a falling knife or will Lightspeed stocks rebound soon?
The future will be interesting. But one thing is certain, many investors remain patient to discover the truth.
Can Lightspeed’s Growth Trajectory continue?
Spruce Point’s concerns are highlighted in the report. Investors now consider whether Lightspeed is able to maintain its reported growth rate (accurate, or not)
This stock is a great investment opportunity for investors. It’s omnichannel-, ecommerce- and payments company that has secular catalysts. Lightspeed’s niche growth market has allowed it to rise much more during the pandemic. Lightspeed stock was one of the most popular investments for growth-oriented investors in a period when investors were reviewing their portfolios.
Many investors held a 10-bagger when they invested in Lightspeed during the worst of the recession. The pandemic triggered by Lightspeed was a catalyst for investors to question Lightspeed’s potential growth. It has proven difficult for this stock to be shorted over extended time periods.
What Do Analysts Have to Say About LSPD Stock
TipRanks analysts rate Lightspeed as a Moderate Buy. There are 13 analyst ratings. 10 buy recommendations, 2 hold recommendations and 1 sell recommendation.
This stock has an average Lightspeed price target of $121.56. The analyst price targets vary from $156.35 to $88.20 per shares.
The bottom line
Lightspeed has seen rapid growth since it went public in 2019. Acquisitions are the main reason. Lightspeed stock is a highly-growth option that investors have been enjoying in recent years because of the ongoing acquisitions.
Investors need to take into account that the short-sellers poured cold water onto this stock. Lightspeed has a lot to love, however, it is best for investors to stay on the sidelines.
Disclosure: Chris MacDonald didn’t hold any positions in the securities listed in this article at the time it was published.
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