After losing nearly 78% of its value in the previous two years, Lightspeed Commerce (TSX: LSPD) is continuing to underperform the broader market in 2023. At the time of writing, LSPD stock was trading with 2.3% year-to-date gains against the TSX Composite Index’s 4.6% advances.
Before I discuss what could be next for Lightspeed stock in 2023 and beyond, let’s take a closer look at some key fundamental factors affecting its price movement lately.
LSDP stock: Key factors affecting its price movement
It’s important to note that a massive sell-off in LSPD stock started towards the end of September 2021 when a New York-based short seller, Spruce Point Capital, made several allegations against the Canadian tech firm and its management. Although these allegations failed to significantly impact Street analysts’ target prices and financial growth estimates for the e-commerce software provider, the short report certainly hurt retail investors’ sentiments. This was one of the key reasons why LSPD stock lost more than 58% of its value in the quarter ended in December 2021.
At the start of 2022, a big tech meltdown started when macroeconomic uncertainties and high inflationary pressures raised the possibility of aggressive interest rate hikes in the near term and encouraged stock investors to flee risks. As a result, most high-flying Canadian tech stocks from recent years, including Lightspeed stock, witnessed steep losses. The stock ended 2022 with a 62% decline. As a result of this tech sector-wide sell-off, the main index on the Toronto Stock Exchange also ended last year with about 9% losses.
Nonetheless, the stock market started 2023 on a strong note, with recovery across sectors, especially in tech stocks. This recovery was primarily fueled by investors’ expectations that inflation might already have peaked and the central banks in the United States and Canada might soon slow the pace of interest rate hikes. These expectations helped LSPD stock post its best monthly performance since August 2021, as it inched up by 24.4% in January 2023. But since then, it has been on a downward trajectory again as the recent collapse of multiple regional banks in the United States is keeping global investors on their toes.
What’s next for LSPD stock in 2023?
In the first three quarters of its fiscal year 2023 (ended in December 2022), Lightspeed reported a 36% YoY (year-over-year) increase in its total revenue to US$546.3 million as the demand for its omnichannel commerce platform remains strong. During these three quarters, its adjusted net loss also fell significantly on a YoY basis from US$0.52 per share to US$0.17 per share, reflecting its progress toward sustainable profitability.
But we must not forget that besides a company’s internal financial growth trends and fundamentals, economic factors also play a key role in giving direction to its share prices. And as macroeconomic uncertainties are far from over, the likelihood of a looming recession is keeping tech investors on edge. Given these economic concerns, the possibility of LSPD stock moving further lower in the short-term remains open. That said, I also need to highlight that Lightspeed’s strong long-term fundamentals should help its stock soar in the years to come and deliver outstanding returns.
