Lightspeed Commerce Mulls Sale Amid Stock Market Slump
Lightspeed Commerce, the Montreal-based point-of-sale software company, is now the latest in a string of Canadian tech firms considering going private, following a challenging period for publicly traded technology stocks. Recently, the company confirmed it is undergoing a strategic review led by JP Morgan Chase, with one of the possibilities being a sale to a larger competitor or a private equity firm. This move comes after a significant stock market slump, particularly affecting tech companies that saw soaring valuations during the pandemic.
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Despite its growth in recent years, Lightspeed has faced difficulties in turning profitability, even though it has made strides in increasing its adjusted operating income—a measure that analysts often track closely. Under the leadership of its founder, Dax Dasilva, who returned as CEO earlier this year, the company has been shifting focus toward serving larger, more complex clients. This shift has resulted in shedding smaller clients, leading to a drop in subscription revenue. However, the strategic direction has not always instilled confidence in investors, contributing to the company's declining stock price.
Lightspeed went public in 2019 with an initial share price of $16 and briefly soared to $150 a share in 2021 during the peak of investor excitement for tech stocks. However, the company’s valuation has since plummeted by over 85%, and it currently trades around $21 per share. Despite this, news of a possible sale has caused a slight resurgence, with shares spiking 13% following the report.
The tech sector's downturn has led several Canadian companies like Lightspeed to explore privatization. In recent months, companies like Nuvei Corp and Absolute Software have also agreed to buyouts. The potential sale of Lightspeed reflects a broader trend of tech companies opting to go private as public market valuations remain depressed. While there is no guarantee that Lightspeed will be sold, the possibility remains open, and a number of U.S.-based competitors and private equity firms are considered potential buyers.
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