The tech industry as a whole has been on fire this year. While the rest of the market has been jumping up and down, tech seems to have taken over. It’s something very few saw coming, even with a pandemic taken into consideration.
But the reason is clear. What many foresaw as a slow transition happened overnight with the pandemic. Suddenly, everyone need to work from home. This meant two things for the tech industry, such as a rise in ways to keep data safe and that people will still need stuff — a lot of stuff — and all from the safety of their own homes.
That’s why Lightspeed POS Inc. (TSX:LSPD)(NYSE:LSPD) was on fire this year. Again, even without the pandemic, economists believed this stock would be on fire. But that’s been kicked into overdrive. So let’s look at what this stock is worth after such a year, and where it’s headed.
The last year
When Lightspeed first came on the market about two years ago, the stock focused on providing point-of-sale services to mainly small- and medium-sized retail and restaurant businesses. But since then, it’s expanded into the e-commerce market. Now, pretty much anyone can create a platform using Lightspeed — and clearly, many are.
The company posted quarter after quarter of record revenue. Then, the market crash hit, and share value dropped by a whopping 70% peak to trough. It’s what many believed e-commerce companies like Lightspeed would go through, but no one foresaw the expansion within the e-commerce market.
As I mentioned, e-commerce boomed with the work-from-home economy. A company like Lightspeed proved especially beneficial as it allows restaurants to deliver food, retail stores to deliver products, and now anything in between as well. Since so many businesses realize now they need an online presence more than ever, that made Lightspeed’s free trial a clear win.
Fast forward to today, and Lightspeed is trading at all-time highs. During the latest earnings report, customer locations increased by 40% year over year, a 62% increase in revenue, and a 60% increase in gross profit. It also acquired ShopKeep that will help the company continue its expansion throughout the United States.
So to answer the biggest question, let’s say you took your Tax-Free Savings Account (TFSA) contribution room of $6,000 and bought Lightspeed stock on December 31, 2019. Almost one year later, shares are worth about $75 each. At $35.55 per share at closing, that would mean your original investment would be worth $12,658 today! More than double your investment!
Does the future look as bright? In the short term, probably not. The stock has a lot more to prove it can tackle its competitors, but it’s on the way there. That means another market crash may see this stock plummet as it did before, but maybe not quite so severely.
But if you’re looking for a buy and hold stock, if it does dip it could be an incredible time to pick up Lightspeed stock. The company has been on a tear, and it looks like it will continue for some time.
As e-commerce continues to grow and change, Lightspeed seems to be able to roll with the punches. So buying it at a low could be just the thing your portfolio needs.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Amy Legate-Wolfe owns shares of Lightspeed POS Inc. The Motley Fool owns shares of Lightspeed POS Inc.