Lightspeed Stock: What Investors Should Expect Ahead of Earnings

Lightspeed stock (TSX:LSPD)(NYSE:LSPD) warned investors last quarter growth may not be as great as hoped. Things have changed since then, but how much?

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Lightspeed Commerce (TSX:LSPD)(NYSE:LSPD) earnings are due out after market close on February 2. And it has been quite the last few months for the company. After a huge crash in Lightspeed stock, what can Motley Fool investors expect going into this next quarter?

Warnings all around

The warnings started coming in back in September, when a short-seller report by Spruce Point Capital Management made accusations against Lightspeed. In the report, it stated the company’s metrics were blown out of proportion. Further, that Lightspeed’s acquisitions weren’t doing as well as the company reported.

Lightspeed’s management denied any of the claims. It also soon came out with a statement during its last quarter, that the company likely wouldn’t fare as well as hoped during the holiday season. This came down to supply-chain concerns for both the company and its merchants. Add in a tech crash in January, and Lightspeed plunged by 80% from peak to trough.

What management says

Amid all this, management has had a few things to say. Most recently, there have been signs of life going into the third-quarter report. Lightspeed stock announced its U.S. retailers grew twice as much as the industry average in 2021. In fact, with lockdown restrictions eased, the holidays were in fact much better than anticipated for retailers and same-store sales.

“With all of the uncertainty surrounding the ongoing pandemic and supply chain disruptions, we are thrilled to see our customers continue to thrive and grow in 2021,” said Lightspeed President JP Chauvet. “We believe the vast adoption of new technologies like cloud POS, omni-channel distribution, contactless payments and order ahead are helping drive this growth and expansion, and we’re excited to see where these developments take Lightspeed and our customers in 2022.”

The company later announced it would be launching an “all-new” Lightspeed Restaurant platform after success in the North America and Europe. This was on top of adding two new members to the Board of Directors, specifically dedicated to European and Asia-Pacific markets. So clearly, expansion is still top of mind.

What analysts say

So what do analysts make of all this, especially after the last quarter? Back in November, Lightspeed stock reported total revenue up 193% year over year, subscription revenue up 132%, and transaction-based revenue up 320%. However, it also reported a 205% increase in its net loss, which led to a further market correction.

Analysts weighed in heavily over the last week, adjusting target prices but maintaining a ‘buy’ rating for Lightspeed stock. This seems to be because there is substantial long-term value, especially at prices trading around $43 per share, as of writing.

In particular, analysts pointed to customer location growth and the rise in Lightspeed Payments, which could contribute 40% of organic annual revenue. Website traffic continues to increase, and the economy reopening will certainly benefit the company in 2022 as well. Estimates have Lightspeed bringing in $141 million in revenue, with a loss per share of $0.36. All this being said, analysts sliced their targets. While the average is still at $108, some analysts recently cut their targets almost in half to around $70 per share. And this comes down to continued volatility around the stock.

Foolish takeaway

The short-seller report of yesteryear continues to hang like a dark cloud over Lightspeed stock. Further, the pandemic continues to create a volatile situation that Motley Fool investors aren’t confident in. That being said, long-term investors could look to the company’s expansion and innovation as a reason to buy. While shares aren’t likely to hit triple-digits this year, there is still a huge potential upside at these prices going into third-quarter earnings.

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 Lightspeed Commerce. The Motley Fool recommends Lightspeed Commerce.

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