Treading lightly into Lightspeed

Investment Analysis Clubs Saul’s Investing Discussions
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One should be very careful resurfacing Lightspeed; but hey, fools rush in - even Motley ones. LSPD reported third quarter earnings this morning and here they are:

LSPD Lightspeed 2/3/2022 Q3
Revenue 152.7
seq chg 15%
YoY 165%
Organic Rev 126.8
Organic seq chg 78%
Organic yoy chg 57%

I believe these numbers look good. Because of its recent debacle, the company has a very low EV/sales ratio of only 9.

Pre-market is not treating the stock well. It’s down nearly 13% as of the time of this writing (08:55 est)

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With the facebook debacle , all things tech will likely be getting dumped on today. So don’t think today has anything to do with actual lightspeed numbers. Time will tell , though if you are liking the numbers today , that story doesn’t change even with the expected crap show to happen today.

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Facebook is now at 15 PE.

It is an outstanding business, gushing in cash and has 80% Gross Margins and has guided to 11% - 13% growth next year.

It is investing billions in creating a trillion dollar metaverse industry.

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With the Facebook debacle, all things tech will likely be getting dumped on today.

Our companies have less than nothing to do with Facebook so it was a ridiculous response. It’s now just 14 minutes after market opening and more than half of the loss has already been erased. Companies like Microsoft, Google and Amazon give much more indication about our companies, and they all did very well.

Saul

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It’s important to mention that LSPD is likely down in stock price also because they announced yesterday that its founder and CEO, Dax DaSilva, is removed from the CEO role.
They have appointed a new CEO.

It is a terrible sign when your company’s founder cites “a sense of burnout after ten years” as the reason to quit the role.

https://www.bloomberg.com/news/articles/2022-02-02/lightspee…

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I saw this post and, keeping the senseless Facebook-related selloff in mind, took a small position, but quickly sold it. I wonder how much of the growth is acquisition-related. Other companies where I have gotten burned, Fubo and Magnite, are both, I think, because the market distrusts acquisition-fueled growth in certain cases.

Somewhat relatedly, I was in a home-brewing shop the other day and I saw they were using Lightspeed. I asked them about it and they said they hated it. They had loved it but because of an acquisition Lightspeed had done Lightspeed had forced these merchants to use a different system from the one they had been using. This change which was what they hated.

They said they far preferred Shopify, but Lightspeed did something which Shopify didn’t which was why they kept it for now, but one guy said he hated Lightspeed so much he was learning to code to come up with a solution himself. They seemed pretty confident they would be able to dump Lightspeed eventually.

Now I confess I really don’t understand what Lightspeed does, and this is purely anecdotal, but it didn’t sound great.

Finally, I saw jonwayne’s post about the CEO resigning and felt good to be out of today’s trade with a tiny profit.

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The issue I see with LSPD current report is the weak guidance: $138.00m next quarter. That’s -9.63% QoQ. With 10% beat, that’s 0% QoQ growth. Huge deceleration from last 3 quarters. It makes sense because the end of tailwind of reopening of the economy.

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Also, the way they communicated the departure of the CEO was awful, as if it is merely a promotion of the other guy. This company has had issues with communication from day one and the PR on this lacked plain English and candor. Communication issues, leadership issues, acquisitive, this one has fallen far from the standards established here.

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It is a terrible sign when your company’s founder cites “a sense of burnout after ten years” as the reason to quit the role.

I read the bloomberg article, and I didn’t see it as a terrible sign at all – quite the contrary, I found it a mature decision on the part of daSilva and LSPD.

It is a very unusual startup that is blessed with a founder who has technical expertise, vision, charisma, management skills, etc etc etc. Very quickly a founder has to begin letting go of various responsibilities, and it is quite likely that daSilva is really best at coding, yet that was probably one of the first things he had to let go of.

We will need to wait a bit to see if LSPD really has legs, and whether they sort out the significant management problems they appear to have.

But to say it is a bad sign when someone burns out? I don’t agree (as someone who has burnt out several times).

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From a personal health stand point it may be a great thing and we of course all wish DaSilva the very best.

From an investor’s standpoint it’s indisputably a negative. And at best a question mark.

Shopify, Netflix, The Trade Desk, Amazon (til recently), Upstart, CrowdStrike, Cloudflare, Zoom Info, Zoom, Bill, Monday , ZScaler all benefit greatly from dedicated founder-CEO’s who are passionate about building successful, lasting, impactful businesses.

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We will need to wait a bit to see if LSPD really has legs, and whether they sort out the significant management problems they appear to have.

Why? A company’s performance and its management team either meet your standards or it doesn’t. That’s one of the most important lessons you can learn as an investor regardless of style.

Honest question: Exactly what in LSPD’s performance this quarter deserves more patience from shareholders given the alternatives?

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From Broadway Dan:
From a personal health stand point it may be a great thing and we of course all wish DaSilva the very best.

From an investor’s standpoint it’s indisputably a negative. And at best a question mark.

Shopify, Netflix, The Trade Desk, Amazon (til recently), Upstart, CrowdStrike, Cloudflare, Zoom Info, Zoom, Bill, Monday , ZScaler all benefit greatly from dedicated founder-CEO’s who are passionate about building successful, lasting, impactful businesses.

and from stocknovice:
Why? A company’s performance and its management team either meet your standards or it doesn’t. That’s one of the most important lessons you can learn as an investor regardless of style.

Honest question: Exactly what in LSPD’s performance this quarter deserves more patience from shareholders given the alternatives?

Hey guys! Chill pill time!

Regarding Dan’ comment and examples: Yes, I agree completely! And also there are many examples to the contrary – SNOW being one of them.

Regarding stocknovice’s comment: Yes, I agree completely! I had owned LSPD, and was enthusiastic about what they APPEARED to be accomplishing. In the end, I was wrong, and sold. They may still get their act together, at which point they’ll merit attention, and maybe even my investment. Until then, I wait and see.

My point regarding the bloomberg article was that the founder’s burnout and resignation was not the reason to move on.

Happy Thursday!

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