Lightspeed Commerce (NYSE:LSPD) stock is on the rise Wednesday following the release of a short report.
Spruce Point Capital Management is behind the short report hitting LSPD stock today. The investment management firm highlights several reasons that it believes Lightspeed Commerce could see shares fall from 60% to 80%.
Let’s jump into the details from that report below!
LSPD Stock Short Report
- Spruce Point Capital Management believes that Lightspeed Commerce overinflated its business ahead of its IPO.
- That includes overstating customer count by 85% and gross transaction volume by 10%.
- It also says that organic growth has been on the decline throughout its IPO process.
- Despite this, the investment management firm claims that LSPD reported increasing Average Revenue Per User.
- Another problem it has is a recent string of acquisitions that it claims doesn’t have a clear path of profitability for Lightspeed Commerce.
- Spruce Point Capital Management also takes issue with the leadership team behind LSPD stock.
- That includes CFO Brandon Nussey, who was previously involved in a financial scandal.
- Finally, the company “commands a premium multiple of 23x and 47x 2022E sales and gross profit despite its substandard financial reporting quality, and inability to generate positive EBITDA margins or cash flow 16 years after it was founded.”
The short report for LSPD stock comes alongside heavy trading of the shares. As of this writing, more than 5 million shares of the stock have changed hands. That’s quite the increase over the company’s daily average trading volume of about 963,000 shares.
LSPD stock was down 9.7% as of Wednesday afternoon.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.