Investors, Retailers Wildly Disagree Over Fate of Battered eCommerce POS Companies

It seems there’s no middle ground these days when it comes to the payments and point of sale system providers space.

You either “love ‘em, or hate ‘em,” but there’s no gray area allowed in between.

As much as these software and hardware providers serve as the backbone of the digital economy and commerce explosion — not just over the past two years of COVID but for the past decade — this black-and-white mindset has left some of the biggest names in eCommerce black and blue.

Chief among them right now is Lightspeed, the Montreal-based company that has seen its stock and valuation drop over 75% in the past four months, and now just announced that its 44-year-old founder was relinquishing the CEO role of the company he’s built and led since 2005.

“The Lightspeed board of directors has appointed current President JP Chauvet to the role of Chief Executive Officer, effective immediately,” the company said in separate earnings and staffing statements released after the close of trading Wednesday (Feb. 2), adding that outgoing founder and former CEO Dax Dasilva would continue in the role of executive chair, with an active hand in the company’s social and environmental policy initiatives.

This, after Lightspeed raised its guidance and delivered better than expected fiscal Q3 results for the three months ending Dec. 31, that showed 165% revenue growth on over $20 billion in transactions done at 315,000 eCommerce customer locations.

Even though Lightspeed pointed out that its omnichannel customers grew their businesses 35% last year, or roughly double the industry average of 18%, investors were having none of it and took the stock down another 20% in extended trading after the announcement.

And Lightspeed is not alone, as several other large cap players are suffering substantial sell-offs with related eCommerce firms including Block, Shopify, PayPal and Facebook all slumping double digits.

Digital Disconnect

In most cases, a short-term, wholesale sell-off within a sector — such as the one ravaging the eCommerce and POS space for the past month or so — would imply that something had materially changed within the underlying business or economy.

In this case, however, that does not appear to be the case as all indications suggest that the rise of the connected economy, digital shift, eCommerce revolution or however you want to frame it is not only intact, but far outpacing the broader economy thanks to consumers that are still actively buying, whether that’s online, in-store or both.

“The diversity of our customer base and multiple growth levers in our business model continue to serve us well and give us confidence in the long-term durability of our growth model,” Lightspeed CFO Brandon Nussey said in the wake of the company delivering organic growth (excluding acquisitions) of 74%.

That sentiment echoes the confidence espoused lately by digital retail industry players such as Google, as well as that of pre-IPO/still private POS upstart Stripe, which said in late January that its terminals saw a six-fold jump as consumers showed an appetite for traditional shopping in physical stores again.

“Despite the pandemic-fueled surge in online shopping, in-person sales remain important to many businesses’ bottom line,” Stripe Terminal Business Lead John Affaki said before acknowledging that the omnichannel play was as valid as ever. “As consumers return to in-person shopping, businesses around the world are now able to seamlessly accept both online and offline payments in a single system,” he added.

And so, as much as investor sentiment in the stock market may have soured at the moment, business confidence in the eCommerce space has not changed one bit, and anecdotes from the frontlines of retail point to more demand for digital connectivity, not less.