On November 4, 2021, Lightspeed Commerce Inc. (NASDAQ: LSPD) issued a quarterly report offering weak guidance that reportedly implied a forecast of zero sequential growth for its fourth quarter. Previously on September 29, 2021, a shortseller report by Spruce Point Capital Management claimed Lightspeed “massively” overstated its customer count and aggressively promoted other misleading metrics to hide poor revenue growth.

Shares of Lightspeed dropped as much as 30% in intraday trading on Thursday, November 4, 2021, causing significant harm to investors.

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Lightspeed shares tumble after shortseller report, weak guidance

On Wednesday, September 29, 2021, short firm Spruce Point Capital Management issued a report denouncing commerce platform company Lightspeed for allegedly misleading investors by inflating its growth prospects. For example, the report claims Lightspeed “overstat[ed] its customer count by 85%” before it IPO’d in September 2020. The report further claims that in its prospectus at its IPO, Lightspeed claimed a Total Addressable Market of $113 billion that would grow to $542 billion, but a more recent prospectus in 2021 gave a TAM of only $16 billion, an 85% drop. Spruce Point claims most price targets of Lightspeed are in actuality “inflated” by the company’s many recent acquisitions, which one former employee reportedly characterize as “plagued by growth issues.”

Then, when Lightspeed issued its 2022 Q2 report on November 4, 2021, the company issued guidance of approximately $520 million to $535 million for its full fiscal year. According to Motley Fool, when taken in conjunction with its forecast of $140 million to $145 million in 2022 Q3, this seems to imply “no” sequential growth in Q4. This may indicate to investors, according to Motley Fool, that Lightspeed’s revenue growth has been “primarily” driven by acquisitions.

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