Activist Pressures SPS to Pursue Sale, Stock Rises

Activist Investor Pushes for SPS Commerce Sale and Leadership Changes

Activist investor Anson Funds has taken a stake in SPS Commerce, a leading provider of retail supply chain management software, and is urging the company to consider a sale and leadership changes. The push follows meetings with the board and management, during which Anson outlined its concerns about the company's stock performance and strategic direction. Anson portfolio manager Sagar Gupta discussed these proposals at the Bloomberg Activism Forum 2025 according to reports.

Anson is advocating for SPS Commerce to explore a range of strategic options, including cost-cutting, pausing mergers and acquisitions, and potentially changing leadership. Gupta suggested that a sale could unlock significant value for shareholders, with the company's stock having the potential to rise by as much as 40% to $120 a share.

The activist firm believes that the board should "thoroughly examine all options" to improve the company's performance, which has lagged behind competitors.

Several firms have been identified as potential buyers, including software-focused corporations and private equity groups. These include Thoma Bravo, Oracle, Roper Technologies, and SAP, all of which have the resources and expertise to enhance the value of SPS Commerce. Anson's push for a sale reflects confidence that a strategic buyer could improve the company's performance and deliver better returns for shareholders.

Why the Standoff Happened

The move by Anson Funds comes amid a broader market reassessment of SPS Commerce's performance. The company's share price has dropped by 50% since current CEO Chad Collins took over in 2023, despite its strong recurring revenue and dominant position in its niche. Anson argues that the board must objectively assess current management alongside a comprehensive strategic review to address ongoing execution risks.

One of the key concerns raised by Anson is the company's underperformance relative to its peers. According to Gupta, SPS Commerce's stock price lags competitors by 40% to 60%, indicating a disconnect between the company's fundamentals and its market valuation. The activist investor has also highlighted the need for operational improvements, including the adoption of artificial intelligence in customer onboarding and sales productivity.

How Markets Reacted

The announcement of Anson's stake and its demands has had an immediate impact on SPS Commerce's stock. Shares rose 2.3% following the news, giving the company a market value of around $3.2 billion. The stock's reaction underscores the market's openness to the idea of a potential sale and leadership changes, which could unlock value for shareholders.

Investor sentiment has been further shaped by recent earnings reports and analyst downgrades. Morgan Stanley, for example, recently cut its price target for SPS Commerce from $140 to $100, citing macroeconomic concerns and reduced supplier spending in the retail sector. Despite these challenges, the company's recent earnings report showed strong revenue growth of 19% year-over-year, which has provided some support for the stock.

What Analysts Are Watching

Analysts are closely monitoring the situation to determine how SPS Commerce will respond to Anson's demands. Some believe that the company's strong recurring revenue and market leadership position could attract strategic buyers interested in expanding their supply chain management capabilities. Others are skeptical, noting that the broader economic environment continues to pose challenges for the retail sector.

The outcome of the board's strategic review will be critical in shaping the company's future. If SPS Commerce decides to pursue a sale, it could attract interest from a range of buyers, including those with expertise in software and supply chain solutions. However, any decision will need to balance the potential benefits of a sale with the risks of disrupting the company's operations and customer relationships.

For now, the market remains divided on the company's prospects. While some analysts see significant upside potential, others are cautious, citing the macroeconomic headwinds that continue to weigh on the retail sector. The coming months will be crucial in determining whether SPS Commerce can turn its fortunes around or if a change in ownership is the best path forward.