Lightspeed Commerce Stock Is Hitting 52-Week Lows: Bargain or Beware?

Lightspeed stock is down 38% this year, yet analysts believe shares could potentially double in the next year. So what should investors do?

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Lightspeed Commerce (TSX:LSPD) doesn’t seem to be seeing any sort of improving situation these days. Shares of Lightspeed stock remain down 38% in the last year alone. However, look back and the tumble has been even more dramatic.

Since reaching all-time highs of around $160 in September 2021, shares of Lightspeed stock now trade at $17.75 as of writing. That’s hovering around 52-week lows, down 89% since those all-time highs.

So the big question is, could Lightspeed stock be a huge bargain? Or should investors beware?

Let’s focus on today

I could delve deep into the short seller report and tech downturn, but honestly there are plenty of articles out there detailing that history. Instead, I think it’s important we focus on the future opportunity of Lightspeed stock, if there is one.

To do that we need to look at the goals Lightspeed stock management placed for itself, and whether it’s hitting those goals. And if it is, whether those goals are lofty enough for investors to consider the company.

This means looking at earnings reports, and delving into analyst reports and their recommendation for the stock. During the last earnings report, revenue grew 24% year over year, with gross payments volume (GPV) up 75% since 2022 levels to $3.9 billion. The best news, however, was that the adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss was “significantly ahead of previously-established outlook.”

The company now believes it can reach profitability if not this year, then in early 2024. So what did analysts make of these promises?

Analysts weigh in

Analysts have definitely come down on the “bargain” side when it comes to Lightspeed stock. The current average target price sits at about $37 as of writing. That would mean shares could more than double in the near future, if analysts are correct.

So what makes them so confident in the future performance of Lightspeed stock? Mainly, it comes down to its “higher value” merchants, a shift from the small and medium focus the company has had over the years. This would improve its earnings significantly, with a focus on companies with annual gross transaction volume (GTV) above $500,000 annually.

Right now, 15% of the company’s total market is made up of these merchants. However, they bring in 63% of its total GTV as of writing. Add in the cost savings of $25 million per year, and Lightspeed definitely looks like it’s on the way to profits. At least, that’s what analysts believe, stating 2024 certainly looks like a “reasonable” timeline.

Bottom line

So yes, Lightspeed stock is down 38%, and it certainly continues to trade at a loss. However, the company continues to make headway towards profitability. What’s more, earnings are due out on May 18. This could send shares on the path towards $37 per share should the company come out with even more positive news. So yes, if you’re looking for a bargain growth stock that could potentially double in the near future, I would certainly add Lightspeed stock to your watchlist.

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 has positions in Lightspeed Commerce. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

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