Lightspeed Commerce Inc.’s (TSE:LSPD) latest 5.7% decline adds to one-year losses, institutional investors may consider drastic measures

Important Findings

  • The institutions’ sizable holdings in Lightspeed Commerce imply that they have a significant impact on the company’s stock price
  • A total of 9 investors with a 51% stake hold a majority stake in the company
  • Owner research along with forecast data from analysts help better understand a stock’s opportunities

A look at Lightspeed Commerce Inc. (TSE:LSPD) shareholders can tell us which group is the strongest. With 63%, institutions own the maximum shares in the company. In other words, the group is exposed to maximum upside (or downside risk).

As a result, institutional investors suffered the heaviest losses last week after the market cap fell by CA$176 million. Needless to say, the recent loss, which further adds to shareholders’ one-year loss of 50%, may not go down well with this particular category of shareholders. Institutions, also known as “smart money,” have a huge impact on how a stock’s price moves. Therefore, if the decline continues, institutional investors could be pressured to sell Lightspeed Commerce, which could hurt individual investors.

Let’s take a closer look at what the different types of shareholders can tell us about Lightspeed Commerce.

Check out our latest analysis for Lightspeed Commerce

TSX:LSPD ownership breakdown March 29, 2023

What Does Institutional Ownership Tell Us About Lightspeed Commerce?

Institutional investors typically compare their own returns to the returns of a commonly tracked index. As such, they typically consider buying larger companies that are included in the relevant benchmark index.

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Lightspeed Commerce already has institutions on the share register. In fact, they own a respectable stake in the company. This means that the analysts who work for these institutes have looked at the stock and like it. But just like everyone else, they can be wrong. When multiple institutions own a stock, there is always a risk that they will find themselves in a “crowded trade”. When such a trade goes awry, multiple parties can compete to sell shares quickly. This risk is higher in a company without a growth history. You can see Lightspeed Commerce historical earnings and earnings below, but remember there’s always more to tell.

TSX: LSPD Earnings and Revenue Growth March 29, 2023

Investors should note that institutions actually own more than half of the company, so collectively they can wield significant power. We find that hedge funds have no meaningful investment in Lightspeed Commerce. Looking at our data, we see that the largest shareholder is Caisse de dépôt et Placement du Québec with 16% of outstanding shares. Fidelity International Ltd is the second largest shareholder with 11% of the common stock and Dax Dasilva holds approximately 9.3% of the company’s shares. Dax Dasilva, the third largest shareholder, also happens to hold the title of CEO.

We investigated further and found that 9 of the top shareholders make up about 51% of the register, meaning there are some smaller shareholders alongside larger shareholders, somewhat balancing the interests of the others.

While examining a company’s institutional ownership can add value to your research, it’s also a good practice to research analyst recommendations to gain a deeper understanding of a stock’s expected performance. There are a fair number of analysts covering the stock, so it might be helpful to get their overall view on the future.

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Insider ownership of Lightspeed Commerce

While the precise definition of an insider can be subjective, almost everyone considers a board member to be an insider. Management ultimately reports to the board of directors. However, it is not uncommon for managers to be board members, especially if they are founders or CEOs.

Most view insider ownership as a positive, as it can indicate that the board is well aligned with other shareholders. In some cases, however, too much power is concentrated within this group.

Our latest data shows that Insiders own some shares in Lightspeed Commerce Inc. This is a big company so it’s good to see this level of alignment. Insiders own $292 million in stock (at current prices). If you’re interested in investigating insider targeting, you can click here to see if insiders bought or sold.

General Public Property

With 28% ownership, the general public, made up mostly of individual investors, has some influence over Lightspeed Commerce. While this ownership size is substantial, it may not be enough to change company policy if the decision is not aligned with other major shareholders.

Next Steps:

It’s always worth thinking about the different groups that own shares in a company. But to better understand Lightspeed Commerce, we need to consider many other factors. For example, consider the ever-present specter of investment risk. We have identified 1 warning sign with Lightspeed Commerce and understanding them should be part of your investment process.

Ultimately the future is the most important thing. You can access it free Report on analysts’ forecasts for the company.

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Note: The figures in this article are calculated using data for the last twelve months, relating to the 12-month period ending on the last date of the month to which the financial statements are dated. This may not tally with the annual report figures for the full year.

The assessment is complex, but we help to simplify it.

Find out if Lightspeed Commerce might be over or under rated by checking out our comprehensive analysis which includes the following Fair Value Estimates, Risks and Warnings, Dividends, Insider Trading and Financial Health.

Check out the free analysis

This Simply Wall St article is of a general nature. We provide comments based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.


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