Lightspeed POS’s (TSX:LSPD) stock price has made a strong 260% recovery from all-time lows recorded during the height of the coronavirus market crash of March 2020. The omnichannel commerce software provider is a favourite TSX tech stock among retail investors right now. The COVID-19 pandemic and recent product launches rapidly unlocked new growth opportunities for Lightspeed POS this year.
Here are some fascinating facts about this TSX tech growth stock you might not be aware of. These may help you decide if LSPD stock belongs to your portfolio.
Lightspeed POS is a founder-led TSX tech stock
The company’s founder and current CEO is Vancouver-born Dax Dasilva, whose parents migrated from Uganda to Canada in 1972. He inherited an interest in computers from his father, enrolled as a computer science student at the University of British Columbia, but later switched courses and graduated with a Bachelor’s in religion and art history.
Yes, there’s always something that stands out about many successful founders of tech companies. Many are high school or college dropouts like Shopify’s Tobias Lütke and Microsoft’s Bill Gates. Dax at least graduated but as a historian.
At 44, Dax is currently the youngest and the longest-serving director of the company. The award-winning CEO owns 14,667, 922 multiple voting shares (about 16% of total shares outstanding), but he enjoys a 43% voting power in the company. His influence in the company’s strategic direction remains significant, and it’s highly unlikely that we could see a change in voting control anytime soon.
Most noteworthy, institutional investors hold nearly 45% of the company’s total shares. There’s significant interest from the smart money managers on this tech growth stock’s potential fortunes. That said, beware of the elevated risk of a sudden share price decline should this investor group decide to exit its positions all at once at the earliest signs of trouble.
LSPD is thriving in an overcrowded and competitive industry
With over 190 direct competitors today, the company operates in a heavily congested commerce-enabling software industry with cut-throat competition. There are too many hungry peers out to eat its lunch, but the company has survived. And LSPD is growing its revenues very fast. Sales grew over 50% year over year during the quarter that ended in June this year.
Notable competitors include Shopify and PayPal. PayPal Here targets small enterprises, but PayPal has strong partnerships with three fierce retail and restaurant commerce solution providers Vend, LAVU, and Touchpoint.io all working to gain market share.
Further, other strong competitors include Square’s Square POS, Oracle’s Oracle Retail, Microsoft’s Microsoft Dynamics 365 Commerce, and Toast POS. Investors in Lightspeed POS stock should take notice of an aggressive Shopify, which is vigorously pushing Shopify POS to scoop LSPD customers.
LSPD has responded to the competition with innovation and new product launches in the payments processing vertical and e-commerce offerings to take on Shopify and bolster its growth prospects. The recent launch of Lightspeed Capital to offer up to US$50,000 in credit per location to U.S. retailers and the addition of an e-commerce suite for restaurants could help retain customers during the COVID-19 pandemic.
Most noteworthy, the company’s other market share defence mechanism is to buy out smaller competitors in an acquisitions-led growth strategy. It’s still game on.
Already a multi-bagger
Lightspeed POS priced its initial public offering (IPO) at $16 a share in March 2019. Interestingly, the IPO price was just a dollar lower than Shopify’s IPO at $17 a share in May 2015. Shares haven’t provided capital gains as high as SHOP yet. However, Lightspeed POS’s stock has delivered respectable returns of over 130% to early investors.
That said, you needed nerves of steel to hold onto the gains. LSPD stock pulled back sharply during the coronavirus market crash to hit all-time lows under $11 per share in March. An over 73% drawdown from January 23 highs was probably too much to handle. However, shares have pulled off a strong 262% sharp recovery since then.
Be prepared to ride through the high volatility on this promising TSX tech name.
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.
Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Brian Paradza has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify and Square. The Motley Fool owns shares of and recommends Microsoft, PayPal Holdings, Shopify, Shopify, and Square. The Motley Fool owns shares of Lightspeed POS Inc and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short September 2020 $70 puts on Square, and long January 2022 $75 calls on PayPal Holdings.