Investors: This Recent IPO Could Be Even Better Than Lightspeed (TSX:LSPD)

Lightspeed POS Inc (TSX:LSPD) has been Canada’s best IPO of 2019, but this new Israeli startup could be even better.

| More on:
Initial Public Offering (IPO) concept image, businessman selecting stock trading interface

Image source: Getty Images

Lightspeed POS (TSX:LSPD) has been one of the most successful Canadian IPOs of 2019. Up 76% since it went public, the stock has been beating the market handily.

Lightspeed’s success comes after a wave of failed IPOs, including several “gig economy” companies that many investors were hopeful about. So far, Lightspeed’s IPO has bucked the trend. However, in the past two weeks, LSPD took a dive, falling 30% from September 9 to September 16 — likely due to a similar selloff in Shopify stock.

In past articles, I’ve opined that Lightspeed’s similarities to Shopify were the likely cause of its success, so it’s natural that a decline in investor sentiment toward Shopify would affect LSPD as well. It’s not clear whether Shopify and Lightspeed will start rising to record highs again. However, if you’re looking for a new IPO that may have some room to grow, there’s an Israeli startup that just went public and may have some upside.


Fiverr International (NYSE:FVRR) is a gig economy website that allows independent contractors to sell services to buyers. The company previously branded itself as a market for $5 services but more recently started allowing contractors to set their own prices.

Before going any further, let me be clear about one thing: Fiverr’s IPO has not been a huge success so far.

As of this writing, shares are basically flat from their offering price ($21), and way down from their closing price on the first day of trading ($39.9). However, past performance doesn’t necessarily indicate future performance, and there are many signs that Fiverr could actually be a better buy than Lightspeed at current prices.

Why it could be better than Lightspeed

The main reasons why Fiverr could be better than Lightspeed include similar growth rates and a softer valuation.

In its first quarter since going public, Fiverr grew at 41% year over year, narrowly beating Lightspeed’s 36%. Other encouraging growth metrics included a 14% increase in active buyers and a 16% increase in spend per buyer. Less encouragingly, the company expects growth in the 37-38% range going forward, which puts its forecast growth lower than Lightspeed’s (the company expects 40%).

However, forecasts don’t always become reality, and Fiverr’s stock undeniably has one huge advantage over Lightspeed’s: it’s way cheaper.

With a market cap of $650 million as of this writing, Fiverr goes for just seven times its trailing 12-month sales ($90 million). The stock is also fairly cheap compared to book value, with a price-to-book ratio of 1.41. With that said, this company is losing money, and the losses are getting bigger. But the losses as a percentage of revenue are not very high, which hints that the company may become profitable in the not-too-distant future.

Foolish takeaway

Lightspeed has been a favourite of Canadian tech investors in 2019, owing to its successful IPO and Shopify-like image. Now, however, it appears to be stalling. With Lightspeed shares way down from previous highs, it’s natural for investors to look elsewhere. And with similar revenue growth and a much cheaper price, Fiverr may be one for them to keep an eye on.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Lightspeed POS Inc, Shopify, and Shopify. Shopify is a recommendation of Stock Advisor Canada.

More on Tech Stocks

Lady holding mobile phone and shopping bags
Tech Stocks

The Ultimate Growth Stock to Buy With $1,000 Right Now 

Here's why Shopify (TSX:SHOP) could be the ultimate growth stock long-term investors want to consider at this current point in…

Read more »

Hands shaking over a business deal
Tech Stocks

Meet the Growth Stock I Can’t Stop Buying This Year

Topicus stock (TSXV:TOI) has been a top growth stock this year, with strong finances, a stable acquisition strategy, and more…

Read more »

grow dividends
Tech Stocks

Celestica Stock Is up 44% Since Earnings: What Investors Need to Know

Celestica continues to benefit from strong demand and production efficiencies, yet the stock remains undervalued.

Read more »

healthcare pharma
Tech Stocks

What’s Going on With WELL Health Stock?

WELL stock (TSX:WELL) made strong moves once again, with record earnings and even higher guidance for 2024.

Read more »

A shopper makes purchases from an online store.
Tech Stocks

3 Reasons to Buy Shopify Stock Right Now

Based on these three top reasons, Shopify (TSX:SHOP) stock appears undervalued to buy right now.

Read more »

stock research, analyze data
Tech Stocks

What’s Going on With Lightspeed Stock?

Lightspeed (TSX:LSPD) stock has been climbing once more but is still far from its three-digit share price. So, is it…

Read more »

Target. Stand out from the crowd
Tech Stocks

Missed Out on Nvidia Stock (Again)? Buy Descartes Instead

Nvidia (NASDAQ:NVDA) stock soared yet again after earnings, passing the four-digit mark. But with shares so high, maybe this option…

Read more »

Group of people network together with connected devices
Tech Stocks

This Is the Best Overlooked AI Stock on the TSX Today

This AI stock has been a top growing in the last while, but remains overlooked despite its strong portfolio and…

Read more »