Lightspeed POS (TSX:LSPD): Is the Tech Stock Worth Buying Today?

Lightspeed POS stock recently released its earnings report and made a new announcement that could make it an excellent buy today.

| More on:
sad concerned deep in thought

Image source: Getty Images

Investing in Canadian tech stocks turned out to be an excellent move for many investors in 2020. Some of the key players in the Canadian tech sector soared to remarkable new heights due to favourable industry tailwinds created by the pandemic.

Lightspeed POS (TSX:LSPD)(NYSE:LSPD) was one of the top-performing TSX stocks throughout 2020 and the start of 2021. Share prices for the TSX stock climbed by more than 800% between its March 2020 lows and August 2021 highs.

The company initially suffered lost revenue due to its customers being forced to shutter down amid the pandemic. However, Lightspeed POS quickly pivoted to update its offerings to customers and meet the rising demand of its omnichannel selling model. As more businesses shifted to adopting the online shopping model, its strong performance drove its stock price higher.

Lightspeed POS released its quarterly earnings report for the quarter ending on June 30 on August 5. Lightspeed POS share prices were rising leading up to the earnings report, and the stock hit a new all-time high on August 6, 2021, trading for $122.12 per share.

At writing, the tech stock is down by 4.54% in a matter of three days. Today, I will discuss Lightspeed POS stock to help you determine whether it is an asset worth adding to your portfolio today.

Why is Lightspeed stock declining?

Lightspeed recently announced on August 9 that the company is planning to offer its seven million additional common shares to the public. The company’s latest equity offering could provide a massive boost to the number of issued and outstanding common shares. The number of shares could go as high as 8.05 million, provided that the underwriters at Morgan Stanley and Barclays fully exercise their overallotment option.

Theoretically speaking, the company could raise almost $9.4 million in gross proceeds at its share prices today.

Before the latest offering, 133,734,333 Lightspeed POS shares were there, and estimated revenues of US$573.33 million in the next four quarters would place the common shares at a value of 22.67 times the next 12-month revenue per share. Increasing the number of shares carried the expectation of Lightspeed share prices to drop by 6% after the announcement due to the dilution caused by the new equity offering.

Considering that the prices dropped by just 4.54%, it is a good sign, because it shows that the market is still bullish on the stock.

Foolish takeaway

Lightspeed POS has been a high-growth tech stock on the TSX since its debut on the stock market in 2019, and its revenue-growth rate has consistently perplexed the market. The company delivered revenue growth of 220% in its recent quarter that ended on June 30, despite expectations of it slowing down, as the world slowly inches closer towards normalcy.

The company’s business model and strategic acquisitions have undoubtedly paid off for Lightspeed POS, and it continues to be a top growth pick in the Canadian tech sector.

A point of caution to note is that Lightspeed POS stock is an expensive stock. At writing, its share prices reflect a price-to-sales multiple of 51.72. However, the company has the growth potential to grow into its price-to-sales multiple and continue delivering stellar returns to its shareholders.

The current dip could be an excellent time to add Lightspeed POS shares to your investment portfolio.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Lightspeed POS Inc.

More on Tech Stocks

Man considering whether to sell or buy
Tech Stocks

BlackBerry Stock Is Down 20%: Buy the Dip or Call It a Pass?

BlackBerry stock has seen a series of 20% monthly dips since December 2023. Should you buy the dip or call…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Kinaxis: The AI Stock Investors Are Missing Out On

Kinaxis stock (TSX:KXS) is one AI stock you don't want to miss, with proven results and long-term contracts leading to…

Read more »

telehealth stocks
Tech Stocks

Forget Shopify Stock: 1 Tech Stock to Buy Instead

Shopify stock (TSX:SHOP) plunged by over 20% after earnings guidance for the second quarter came in lower, but this other…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Tech Stocks

Down 27% But Not Out: Why Dye & Durham Is a Buy Today

Dye & Durham stock reported a steep fall of 27% in two months. What happened? Should you be worried about…

Read more »

A chip in a circuit board says "AI"
Tech Stocks

These 2 AI Stocks Are Set to Soar in 2024 and Beyond

Here are two of the best AI stocks in Canada that you can buy now and hold for at least…

Read more »

edit Sale sign, value, discount
Dividend Stocks

2 Bargains I’d Buy as They Dip Toward 52-Week Lows

Buying a stock at its 52-week low is a bargain when you are confident this stock will recover sooner or…

Read more »

stocks rising
Dividend Stocks

2 Market-Beating TSX Stocks That Are Still Buys Today

goeasy (TSX:GSY) stock has easily beaten the TSX. Together with Celestica (TSX:CLS), the growth stocks could gain much more value…

Read more »

Growth from coins
Tech Stocks

A Few Years From Now, You’ll Wish You Had Bought This High-Growth Stock

Are you looking for a high-growth stock that can make you a millionaire a few years from now? Then read…

Read more »