LSPD – A short-sellers dream?

I’ve shared the following analysis of the Spruce Point short attack on LSPD with a few individuals and was asked to post it. As it includes a few PDFs from the prospectus to support the analysis, I am compelled to provide the following link to my website/blog due to the graphic restrictions of board postings:

In short, I remain long LSPD and have added to my position on the dip…I’d also be remiss if I didn’t thank Willem for his timely and comprehensive summary of the accusations.

We will certainly know on November 4th pre-market if there was any truth.

You may also access this post and other investment posts at my twitter account: @Vnunnemaker




My favorite part of your analysis:

" I am very bullish that regardless of their estimated TAM, LSPD will release a very good revenue number and maintain their strong y/y growth trend, regardless of the actual TAM estimates".

TAM is but an estimate - and often one in flux anyway as new markets emerge and evolve. Revenue, on the other hand, is strictly objective, calculable, and auditable (as you astutely point out). Together with customer growth, ARPU, and FCF… these are the numbers I will closely scrutinize on November 4th and decide how to proceed. If not discussed at the company’s initiative on the call, I expect questions about FCF to be the first ones out of the gate by the analysts.

I am also not bothered much by Spruce Point’s intent focus on organic vs. acquired-included growth; But that’s just me (similarly I am not bother by, for example, Okta+Auth0). To me, you are what your revenue says it is under your roof… I will give you some quarters to prove that your acquisitions are accretive.

Disclosure: 2% trial position, picked up on this pullback.


Figuring out TAM is almost arbitrary. When I was on the verge of selling my vegan cheese company, Nary Dairy, to a craft brewer, my projections seemed almost make-believe because I could use the entire vegan cheese market as my TAM (small), vegan dairy market (a little larger), or the entire market for dairy-based cheese (humongous). It was up to me which one to choose, and frankly, the process made me uncomfortable.

If you’re pulling off an IPO, it really doesn’t behoove you to be conservative with your estimates, but you also don’t want to be ridiculous. I think LSPD couldn’t decide which numbers to use, at any given time, which is not smart nor comforting as an investor in a multi-billion dollar company, but it’s understandable. I think at that level, it’s best to be conservative and leave some money on the table that you can collect later, when your numbers back up your claims.


Frankly I find the whole TAM point a total non-issue, but even though I do hold LSPD I DO very much worry about:

  1. Actual organic growth vs acquired. Sure accretive acquired growth is fine but not as a substitute for organic growth
  2. To what extent its assembly of acquired assets form a Frankenstein’s monster of a suite of products/multitude of functionality vs an elegantly converged and fully integrated product suite
  3. What moat it has vs Toast and other players which I have seen much more positive reviews for

I don’t have answers but I have questions and these are putting me off loading up on this dip.