Lightspeed POS Inc. (LSPD) Is On The Run!

Highlights A large portion of the company is held by institutions and individual insiders, indicating insiders' perspective of the company in the long run. Unique business model and experienced management team with good leadership. A high and reasonable ~30% expected revenue and earnings growth per year in the next 3 years. Company Overview Lightspeed POS Inc. (LSPD.TO) provides commerce-enabling Software as a Service (SaaS) platform for small and midsize businesses, retailers, restaurants, and golf course operators. Its SaaS platform enables customers to engage with consumers, manage operations, accept payments, etc. The company's solutions cover front-end customer experience that include point of sale, omni-channel engagement, home delivery, and order and loyalty management, as well as management of discounts, price rules, and gift cards; back-end operations management comprising product and menu, inventory, bookings and membership, customer, employee, accounting, floor and table, workflow, reporting and analytics, and real-time dashboard; and integrated payment gateway solutions. It also sells a suite of third-party hardware products to complement its software solutions for the retail and hospitality segments, such as customer-facing displays, stands, barcode scanners, receipt printers, cash drawers, payment terminals, and an assortment of other accessories. The company was formerly known as LightSpeed Retail Inc. and changed its name to Lightspeed POS Inc. in October 2014. Lightspeed POS Inc. was founded in 2005 and is headquartered in Montreal, Canada. Ownership One of the strengths of the company is the experienced management. The average tenure of the leadership team is 2.8 years, and the longest tenure is 16.42 years which is Dax Dasilva, founder and CEO of the company. Most of the team members have more than a year of experience. This indicates that the management team is considered experienced. Meanwhile, the average tenure for the board members is about 2.6 years, which is a little shorter. This indicates its board of directors is considered experienced, which suggests a strong board. This is a good sign to investors as the management team is relatively mature and has stayed long enough in the company. As an investor, you would want to invest in companies with a mature, experienced and stable management team, other than the opposite. On the other hand, patient investors could wait and see whether the management team can expand the business and bring a future to the company. The company is mainly held by institutions, about 58.2% (76M shares). The rest is held by the general public (30.8% with 40M shares), individual insiders (10.9% with 14M shares), and private companies (0.1% with 131K shares). This is a solid buy-and-hold sign to investors as institutions and insiders have more information and know better about the company than the public. Suppose they hold a large percentage of the company. In that case, it indicates the company can become the next unicorn in the future. One thing that attracted my attention is that BlackRock Inc. has more than 1.8M shares. More importantly, it increased its percentage of ownership by 871% from its last disclosure. I think we all know BlackRock Inc. by its reputation and consistency of outperforming the market. It is not difficult to see that they definitely have information showing the massive potential of the company in the future. Company vs. Industry & Market Over the past week, LSPD has been up about 3.5% and 0.2% up for the industry (CA). However, the company expects to almost double its market cap by an insane annual return rate of 163.1% over the next year, compared to the industry's and market's estimated 44% and 35.9% annual return, respectively. On the other hand, high return means high volatility. In terms of long-term price volatility, the company is extremely volatile compared to the average market volatility. This suggests it is normal to see any large fluctuation in its stock price. For long-term investors, shouldn't be influenced by the news or market sentiment. For short-term investors, manage and prevent any significant downside risks from any surprises.   We can see that LSPD is a highly volatile company with high upside potential in the future. Investors should be forward-looking while paying attention to what is happening now. Currently, the company is in an upside trend with no significant turning sign. The company is not significantly more volatile than the rest of Canadian stocks over the past 3 months, indicating a stable share price. Also, its weekly volatility has been stable over the past year. As of writing, the company's stock is $92.26. However, according to the comparables analysis, its fair value should be between $5 to $10. As a result, the company is trading above my fair value estimate and significantly overvalued by more than 1500%. This indicates a selling signal to investors who genuinely believe in the efficient market hypothesis. As a sophisticated investor, a combination of analytical and fundamental analyses is a better investment strategy than a unilateral strategy. Future Potential Currently, the company is unprofitable. However, it expects to become profitable in the next 3 years. According to the company's future outlook, its revenue and earnings expect an average annual growth of 30% and 28% per year in the next 3 years, respectively. Such a high growth rate could be explained by the increase in demand and market expansion, which benefit the company in the long run. According to the company's balance sheet, it has $807.2M enough cash that could allow the company to operate for at least 3 years. This allows the company to keep operating while seeking more investments in the future. We all know how intensive the competition in the e-commerce industry, but I believe the company can compete with those big giants due to its unique business model and experienced management team. Conclusion Market demand increase in e-commerce and SaaS industries Has the potential to become profitable over the next 3 years (estimated from consistently beating the market expection) Extremely good business model and team for long-term investments Sources: https://www.digitalcommerce360.com/article/quarterly-online-sales/ https://www.globenewswire.com/news-release/2021/05/06/2224239/0/en/Software-as-a-service-SaaS-Global-Market-Report-2021-COVID-19-Impact-and-Recovery-to-2030.html https://www.nasdaq.com/articles/lightspeed-pos-inc.-lspd-expected-to-beat-earnings-estimates%3A-should-you-buy-2021-05-13 https://money.cnn.com/quote/forecast/forecast.html?symb=LSPD#:~:text=The%2018%20analysts%20offering%2012,the%20last%20price%20of%2073.27. https://www.marketwatch.com/investing/stock/lspd/analystestimates

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Lightspeed POS Inc. (LSPD) Is On The Run!

bullish

Highlights

  • A large portion of the company is held by institutions and individual insiders, indicating insiders' perspective of the company in the long run.
  • Unique business model and experienced management team with good leadership.
  • A high and reasonable ~30% expected revenue and earnings growth per year in the next 3 years.

 

Company Overview

Lightspeed POS Inc. (LSPD.TO) provides commerce-enabling Software as a Service (SaaS) platform for small and midsize businesses, retailers, restaurants, and golf course operators. Its SaaS platform enables customers to engage with consumers, manage operations, accept payments, etc. The company's solutions cover front-end customer experience that include point of sale, omni-channel engagement, home delivery, and order and loyalty management, as well as management of discounts, price rules, and gift cards; back-end operations management comprising product and menu, inventory, bookings and membership, customer, employee, accounting, floor and table, workflow, reporting and analytics, and real-time dashboard; and integrated payment gateway solutions. It also sells a suite of third-party hardware products to complement its software solutions for the retail and hospitality segments, such as customer-facing displays, stands, barcode scanners, receipt printers, cash drawers, payment terminals, and an assortment of other accessories. The company was formerly known as LightSpeed Retail Inc. and changed its name to Lightspeed POS Inc. in October 2014. Lightspeed POS Inc. was founded in 2005 and is headquartered in Montreal, Canada.

 

Ownership

One of the strengths of the company is the experienced management. The average tenure of the leadership team is 2.8 years, and the longest tenure is 16.42 years which is Dax Dasilva, founder and CEO of the company. Most of the team members have more than a year of experience. This indicates that the management team is considered experienced. Meanwhile, the average tenure for the board members is about 2.6 years, which is a little shorter. This indicates its board of directors is considered experienced, which suggests a strong board.

This is a good sign to investors as the management team is relatively mature and has stayed long enough in the company. As an investor, you would want to invest in companies with a mature, experienced and stable management team, other than the opposite. On the other hand, patient investors could wait and see whether the management team can expand the business and bring a future to the company.

The company is mainly held by institutions, about 58.2% (76M shares). The rest is held by the general public (30.8% with 40M shares), individual insiders (10.9% with 14M shares), and private companies (0.1% with 131K shares). This is a solid buy-and-hold sign to investors as institutions and insiders have more information and know better about the company than the public. Suppose they hold a large percentage of the company. In that case, it indicates the company can become the next unicorn in the future.

One thing that attracted my attention is that BlackRock Inc. has more than 1.8M shares. More importantly, it increased its percentage of ownership by 871% from its last disclosure. I think we all know BlackRock Inc. by its reputation and consistency of outperforming the market. It is not difficult to see that they definitely have information showing the massive potential of the company in the future.

 

Company vs. Industry & Market

Over the past week, LSPD has been up about 3.5% and 0.2% up for the industry (CA). However, the company expects to almost double its market cap by an insane annual return rate of 163.1% over the next year, compared to the industry's and market's estimated 44% and 35.9% annual return, respectively. On the other hand, high return means high volatility. In terms of long-term price volatility, the company is extremely volatile compared to the average market volatility. This suggests it is normal to see any large fluctuation in its stock price. For long-term investors, shouldn't be influenced by the news or market sentiment. For short-term investors, manage and prevent any significant downside risks from any surprises.  

We can see that LSPD is a highly volatile company with high upside potential in the future. Investors should be forward-looking while paying attention to what is happening now. Currently, the company is in an upside trend with no significant turning sign. The company is not significantly more volatile than the rest of Canadian stocks over the past 3 months, indicating a stable share price. Also, its weekly volatility has been stable over the past year.

As of writing, the company's stock is $92.26. However, according to the comparables analysis, its fair value should be between $5 to $10. As a result, the company is trading above my fair value estimate and significantly overvalued by more than 1500%. This indicates a selling signal to investors who genuinely believe in the efficient market hypothesis. As a sophisticated investor, a combination of analytical and fundamental analyses is a better investment strategy than a unilateral strategy.

 

Future Potential

Currently, the company is unprofitable. However, it expects to become profitable in the next 3 years. According to the company's future outlook, its revenue and earnings expect an average annual growth of 30% and 28% per year in the next 3 years, respectively. Such a high growth rate could be explained by the increase in demand and market expansion, which benefit the company in the long run.

According to the company's balance sheet, it has $807.2M enough cash that could allow the company to operate for at least 3 years. This allows the company to keep operating while seeking more investments in the future. We all know how intensive the competition in the e-commerce industry, but I believe the company can compete with those big giants due to its unique business model and experienced management team.

 

Conclusion

  • Market demand increase in e-commerce and SaaS industries
  • Has the potential to become profitable over the next 3 years (estimated from consistently beating the market expection)
  • Extremely good business model and team for long-term investments

 

Sources:

https://www.digitalcommerce360.com/article/quarterly-online-sales/

https://www.globenewswire.com/news-release/2021/05/06/2224239/0/en/Software-as-a-service-SaaS-Global-Market-Report-2021-COVID-19-Impact-and-Recovery-to-2030.html

https://www.nasdaq.com/articles/lightspeed-pos-inc.-lspd-expected-to-beat-earnings-estimates%3A-should-you-buy-2021-05-13

https://money.cnn.com/quote/forecast/forecast.html?symb=LSPD#:~:text=The%2018%20analysts%20offering%2012,the%20last%20price%20of%2073.27.

https://www.marketwatch.com/investing/stock/lspd/analystestimates

 

 

 

 

 

 

 

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119.66

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8/ 10

Confidence

1-3 Years

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