Nuvei (TSX:NVEI)(NASDAQ:NVEI) is a Montreal-based company that provides payment technology solutions to merchants and partners in North America and around the world. Shares of this top tech stock had climbed 5.8% over the last week coming into the January 17 trading day. However, its shares were down 2.7% as of early afternoon trading.
The tech stock has been reeling since suffering a steep drop in late 2021. Today, I want to take a snapshot of Nuvei and discuss whether it can regain momentum this year. Let’s jump in.
How has Nuvei fared since the Spruce Point short attack?
In early December, Spruce Point Capital turned its attention to Nuvei. The New York-based investment manager cast doubts over Nuvei’s accounting and raised suspicions about the company’s executive team. Shares of Nuvei had surged to an all-time high of $180 in early September. The short report sent the stock back into double digits.
For its part, Nuvei denied the allegations in the report and accused Spruce Point of being “intentionally misleading” as it owns a short position in the tech stock. In any case, Spruce Point has put doubts in the minds of Canadian investors. The company will seek to alleviate these concerns, as it is set to unveil its fourth-quarter and full-year 2021 earnings in early March.
What can investors expect ahead of its next batch of earnings?
Back in September 2021, I’d discussed why I was bullish on Nuvei going forward. The payment technology solutions market is geared up for strong growth this decade and beyond. Nuvei has already established a promising global footprint.
The company last delivered its third-quarter 2021 earnings on November 9. Its total volume climbed 88% to $21.6 billion, as e-commerce delivered a whopping 83% of its total volume. Moreover, it posted revenue growth of 96% to $183 million. Meanwhile, it reported adjusted net income of $62.3 million — up from $16.5 million in the previous year. Adjusted EBITDA jumped 97% year over year to $80.9 million.
Nuvei posted total volume of $64.1 billion in the first nine months of 2021 — up 119% from 2020. Meanwhile, adjusted EBITDA increased 102% to $225 million. It posted adjusted net income of $178 million in the year-to-date period — up from $42.5 million in the first nine months of 2020.
Should you buy Nuvei stock today?
In the medium term, Nuvei is projecting total volume and adjusted EBITDA growth of 30% or more. Meanwhile, it is aiming for an adjusted EBITDA margin of 50% over the long term. Overall, this is a promising projection for investors on the hunt for growth in the tech sector.
It remains to be seen how substantive Spruce Point’s short report will be. Some investors may remember Spruce Point’s devastating short report that targeted Maxar Technologies. The company denied the allegations. However, in the months that followed Maxar was forced to swallow the bitter pill and took major hits in 2018 and 2019. Nuvei shareholders will hope that history does not repeat itself.
Nuvei is still trading in favourable value territory compared to its industry peers. It recently achieved profitability and looks poised to bolster its growth going forward. I’m still looking to buy Nuvei on the dip in January 2022.
