Will Meme Investors Swoop in on Lightspeed (TSX:LSPD) Next?

A well-orchestrated effort by meme investors might be forthcoming due to a short-seller pressure on a popular e-commerce platform.

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Canadians ages 25 to 44 are open to investing in meme stocks, according to the survey results by fintech startup Hardbacon. Besides taking positions in cryptocurrencies like Bitcoin and Ethereum, 13.3% of the poll respondents said they diversified their portfolios to include meme stocks. The names mentioned were AMC, GameStop, and Cineplex.

On the TSX, BlackBerry (TSX:BB)(NYSE:BB) is perhaps the most popular, if not a pure, Canadian meme stock. At the height of the frenzy, some analysts cite spikes of between 67% and 170%. However, its CEO, John Chen, insists that BlackBerry shouldn’t be likened to meme stocks because it has sound fundamentals.

Meanwhile, top growth stock Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) has been under pressure lately. The share price sunk 11% to $126 on September 29, 2021, when news broke out the company had misrepresented its finances. A U.S. short-selling investment firm, Spruce Point Management, threw the allegations against the point-of-sale and e-commerce software provider. With this recent development, will meme investors target LSPD next?

Under short-seller pressure

Apart from the inflated customer count, the extensive report of Spruce Point also alleges that Lightspeed has covered up how much money it makes and how much growth potential the e-commerce platform has. The investment firm likewise believes that Lightspeed is overvalued.

A shareholders rights litigation firm, also from the U.S., said it would investigate. The Schall Law Firm is looking into a possible violation of securities law by Lightspeed. On October 27, 2021, the share price sunk to $113.56 but recovered quickly on the next trading day. As of October 29, 2021, LSPD trades at $120.63 per share. Current investors still enjoy a 34.27% year-to-date gain. 

Meanwhile, the $17.81 billion one-stop commerce platform launched a flagship e-commerce product. According to management, the new product is built on the integration with its most recent acquisition. Lightspeed recently bought Ecwid, a leading, global e-commerce platform.

The latest product aims to provide retailers with powerful, flexible, and unified e-commerce and omnichannel solutions. Lightspeed Founder and CEO Dax Dasilva said, “Lightspeed eCommerce represents the omnichannel vision that we have believed in for years. Retail merchants need to be able to scale and customize tools to fit their unique business without compromise.”  

No more short interest

BlackBerry gained traction during the meme craze, although it didn’t have the same parabolic returns as GameStop or AMC. Nevertheless, the former smartphone maker was back in investors’ radars. BlackBerry’s QNX is the leading software platform for the automotive sector.

Some observers say the short interest in BlackBerry has waned. Also, market analysts recommend a sell rating. The $7.58 billion company has growth potentials, but it has to start showing revenue and earnings growth soon. Currently, BlackBerry outperforms Lightspeed with its 58.41% year-to-date gain. At $13.37 per share, the trailing one-year price return is 117.75%.

The welcome news to BlackBerry investors is that the company delivered positive operating cash flow and free cash flow in its most recent quarterly results. The cybersecurity and licensing divisions produced excellent results. If it continues in the coming quarters, expect the tech stock to be in the limelight.

Motives

We’re not sure if Reddit traders will make a well-orchestrated move on Lightspeed. They might thwart the short-seller firm’s motive in throwing allegations of misrepresentation against the e-commerce platform.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lightspeed POS Inc. The Motley Fool recommends BlackBerry and CINEPLEX INC.

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