Canadian tech firm Lightspeed walloped by short seller attack
CBC
Fast-growing Canadian technology company Lightspeed is pushing back after a short seller alleged the company has misled investors about its financial health, causing a $2 billion plunge in the company's value.
On Wednesday, Spruce Point Management, an American short-selling investment firm with a history of targeting Canadian companies, put out a lengthy report on Montreal-based Lightspeed Inc., alleging the company has covered up "massive inflation" of how many customers it has, how much money it makes from them, and how much growth potential it has.
Lightspeed is a payment processing company that helps small businesses sell things online and in person. It has been compared to Ottawa-based Shopify, which is currently the most valuable company in Canada.
Lightspeed "baits investors with its massive potential in its payments solution, but we believe it has not been transparent about competitive pressures and material margin decline," the report says, among other allegations.
"We believe Lightspeed is crowding into Shopify's space, and will be forced to compete head-to-head with it, and new entrants such as Amazon. We believe Lightspeed will lose the battle."
WATCH | Spruce Point lays out its case against Lightspeed:
The report prompted shares in Lightspeed to plummet by more than 11 per cent on Wednesday, closing at $126 a share on the Toronto Stock Exchange.
