Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) has had a killer year. Lightspeed stock made billions in investments around the world, seeing revenue explode during that time. The company was also added to the New York Stock Exchange. Shares increased right along with all this news, with shares up 242% in the last year alone!
One year ago as of writing, shares traded at $40 per share. Today, shares are at $147.70 as of writing! That 242% increase means $1,000 invested in Lightspeed stock one year ago would be worth $3,692.50 as of writing!
But is this growth only the beginning? Let’s take a look at Lightspeed stock and see where it’s headed.
Where it stands today
Lightspeed stock stacks up pretty well considering where it was a year ago. The company came on the market and had a lot of competition. In fact, it has since moved away from the point-of-sale service it once provided and now is mainly an e-commerce company. And true, there are plenty of companies for it to head up against. But it’s taken on a very different approach.
Whereas the major competitors set up in one or two large markets, Lightspeed stock is trying to eat up all the rest. The company has taken on a “land and launch” approach. This is where it gets a foothold in countries around the world, starting out small and offering up deals for clients to get hooked. It then gradually increases its foothold throughout these countries, become larger and larger in the process.
This has led to over US$2 billion in acquisitions since January 2020. That’s a major investment, and one that CEO Dax DaSilva believes commits them to this approach. And that’s good news for investors.
These acquisitions cost a lot of money, but it’s money Lightspeed stock can afford. The company has seen revenue explode year over year, again and again. And from a tech company such as this one, acquisitions are where it needs to be right now. It simply can’t compete the traditional way when taking on its competitors. This different approach allows it a way to become a major player, but it’s going to be at a financial cost in the short term.
Yet this is why shares have risen so much. Analysts continue to believe Lightspeed stock is a strong buy even in today’s market environment. The e-commerce industry continues to explode and is in part due to the pandemic. But not entirely. E-commerce was already set to outpace in-store sales by 2030. That’s now just sped up.
Could it crash?
So what Motley Fool investors should consider these days is when do you want to get in on this stock? Notice I didn’t say if. Lightspeed stock has set itself up for success, and it’s similar to many of its competitors when it comes to growth. The company is already in the three-digit range. If Motley Fool investors remember, analysts believed that a company like Shopify was due for a collapse when it reached three digits. Yet shares climbed again and again. Analysts would again say there was a correction due. But it never happened. Shares today trade near $2,000!
Lightspeed stock may not reach four digits any time soon, but it’s unlikely to crash back to the $40 level of last year. Revenue has grown 220% year over year as of the latest earnings quarter. Recurring subscriptions rose by 115%. Lightspeed stock also increased its financial outlook for both the next quarter and full year. The next quarter should reach between $120 and $124 million, and its annual revenue between $510 and $530 million. That’s double the year before!
If you have $1,000 to invest in Lightspeed stock, wait for a slight pullback and do it. The company continues to increase recurring revenue and has a stable expansion model Motley Fool investors can latch onto. Who knows? If you bought those six shares today, by next year they could rise another 242% to $2,142!
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 and Shopify. The Motley Fool owns shares of and recommends Lightspeed POS Inc. and Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.