Lightspeed Commerce (TSX:LSPD) – What’s in Store for 2022?

Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) had a terrible year in 2021. Could it fare better in 2022?

| More on:
online shopping

Image source: Getty Images

Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) stock got absolutely obliterated in 2021. Following a short attack and a disappointing earnings release, its stock cratered to prices not seen since 2019.

In the second half of 2021, Spruce Point Capital released a scathing short report on LSPD, accusing the company of:

  • Overstating its customer count
  • Aggressively recognizing revenue
  • Having suspiciously strong revenue growth in 2020 when competitors faltered
  • Selectively picking and choosing non-GAAP metrics, dropping previous ones when they ceased to flatter the company

This short report on its own took a big bite out of LSPD stock. Shortly afterward, Lightspeed released a disappointing earnings release, which showed its net loss growing as a percentage of revenue. Although Lightspeed’s revenue grew 193% in Q3, costs grew even more. As a result, the stock price fell.

It was a pretty discouraging turn of events. But in 2022, Lightspeed has a chance to turn things around. If Lightspeed can get its costs under control while maintaining strong revenue growth, there’s no telling where its stock could go this year. In this article, I will explore a few things for Lightspeed investors to pay attention to in 2022.

Q4 earnings

The first thing investors are going to want to be on the lookout for in 2022 is Lightspeed’s Q4 earnings. These will answer the all-important question:

“Can Lightspeed keep growing its revenue without growing its costs even more?”

This is of pivotal importance to investors. The reason LSPD sank after Q3 earnings is because the loss worsened considerably. If the company’s net loss keeps spiralling out of control then all the revenue growth in the world won’t save it–just look at what happened to cannabis stocks. In Q4, investors will get a good look at both Lightspeed’s revenue and its cost structure. With this information, they will be able to come to a conclusion as to whether the company is investable or not.

Post-pandemic results

A second thing LSPD investors are going to want to keep an eye on in 2022 is the company’s post-pandemic results in general. The COVID-19 pandemic was a huge tailwind for shopping cart companies like Lightspeed’s Ecwid. Shopify, for example, posted four consecutive quarters of 90%+ revenue growth as a result of the pandemic. That was pretty impressive. And Lightspeed shared in the spoils, with 193% growth in its most recent quarter.

Now, however, analysts are expecting major deceleration. The pandemic is currently raging in the form of Omicron, but is expected to wane in the remainder of the year. As this development unfolds, companies like SHOP and LSPD will lose the catalyst that empowered them to achieve such stellar growth in 2020 and, to a lesser extent, 2021. So investors will want to keep an eye on LSPD’s sales growth in 2022. If it slows down too much then the stock could fall even more than it already has.

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 Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns and recommends Shopify. The Motley Fool recommends Lightspeed Commerce.

More on Tech Stocks

woman data analyze
Tech Stocks

1 Stock I’d Drop From the “Magnificent 7” and 1 I’d Add

Tesla (NASDAQ:TSLA) stock is part of the Magnificent Seven, but Shopify (TSX:SHOP) is growing faster.

Read more »

close-up photo of investor Warren Buffett
Tech Stocks

3 Stocks Warren Buffett Owns That Should Be on Your List, Too

Investing in quality Warren Buffett stocks such as Mastercard can help you generate outsized gains in the upcoming decade.

Read more »

Man data analyze
Tech Stocks

Missed Out on NVIDIA? My Best Growth Stock Pick to Buy and Hold

Despite its consistently improving fundamental outlook, this Canadian growth stock has seemingly been ignored by most investors for a long…

Read more »

A worker drinks out of a mug in an office.
Tech Stocks

The Best Stocks to Invest $5,000 in Right Now

Here's why investing in blue-chip stocks such as Visa should help you deliver outsized gains in 2024 and beyond.

Read more »

Young woman sat at laptop by a window
Tech Stocks

3 Stocks I Think Every Canadian Should Own in 2024

Here's why Canadian investors should hold blue-chip stocks such as Microsoft in their equity portfolios in 2024.

Read more »

Shopping and e-commerce
Tech Stocks

Is Shopify Stock a Buy, Sell, or Hold?

Down close to 60% from all-time highs, Shopify stock trades at a significant discount to consensus price target estimates.

Read more »

Different industries to invest in
Tech Stocks

TSX Information Technology in April 2024: The Best Stocks to Buy Right Now

For investors looking for the best stocks to buy to play a surge in IT spending in 2024 and beyond,…

Read more »

four people hold happy emoji masks
Tech Stocks

Forget Side Hustles: This Blue-Chip Stock Is Your Next Income Stream

Don't waste your time (literally) on a side hustle. Instead, consider this proven blue-chip stock that's seen average growth of…

Read more »