LSPD: Everyone, I have held LSPD since the summer of 2019 and I bought and sold throughout the last 24 months. [Lightspeed Commerce Inc. Subordinate Voting Shares]

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Lightspeed Commerce Inc. Subordinate Voting Shares (LSPD)

Q: Everyone, I have held LSPD since the summer of 2019 and I bought and sold throughout the last 24 months. My remaining amount is less than 2% so not a significant amount of $. They have $700 million plus in cash; they call EBITDA positive this year; they reduced the head count which lowers expenses; interest rates will be increased once or twice then a wait period and then a slow decline. All positives for the stock price. And the Quebec Pension still owns a large block of shares - they haven’t given up! The stock price seems to have held at this price range, so there is no real material downside risk. SQ and Toast are in the same stock price position, an industry decline not a stock specific decline. In a better market this stock will quickly do a triple from here.. So … buy and wait … or… move on? Clayton

Asked by Clayton on October 10, 2023

5i Research Answer:

We can't argue the points, except the risk comment. There is 'always' risk. We have seen (multiple times) stocks trade below their cash value. A company could lose a lawsuit and suddenly have a big obligation. We agree LSPD could do very well under the right scenario. But the company has also 'screwed up' many things (for lack of a better phrase). Five-year return is negative 56%. It is making the right moves, but we would rather see some real evidence of a turn. We think there are better names, with more 'reliability'. We think, it LSPD can excecute a turnaround, there will still be lots of time to buy it in the future. The exception of course is if it were to be acquired by another company. This is a possibiity, but we would not endorse 'just' on this possibility. We doubt management would entertain offers while it is executing a recovery. We think investors can sit this one out, at least for a while.

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