Is Lightspeed Commerce Stock a Buy in May 2023?

Lightspeed Commerce stock has climbed 9% since Shopify stock announced earnings, so is more to come?

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Earnings season is soldiering on, and tech stocks are starting to attract investor attention once more. Yet one earnings report that Canadian investors are still waiting on is Lightspeed Commerce (TSX:LSPD). With Lightspeed Commerce stock due for earnings on May 18, is it a buy this month?

Shopify earnings could bring promise

One of the reasons investors might be considering Lightspeed Commerce stock this month is owing to its ecommerce peer, Shopify (TSX:SHOP). Shopify stock recently put out earnings that were far better than analysts estimated. Furthermore, it announced further layoffs among management, creating $230 million in savings.

Shopify stock also announced it would be selling its logistics business to Flexport for a 13% equity stake in the company. This was to focus on what the company has been good at, which is ecommerce and the growth within this area.

What does this have to do with Lightspeed Commerce stock? The super impressive numbers from Shopify stock showed that merchants were still seeing purchasing, and the company was still able to increase monthly recurring revenue and subscriptions. This could mean that when earnings arrive Lightspeed Commerce stock could see the same.

What we’ve seen so far

Lightspeed Commerce stock didn’t have an impressive third quarter a few months back. The company managed to report a 24% increase in revenue year over year, but earnings came in far lower. That being said, the adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) loss was “significantly ahead of previously-established outlook.” So it looks like the company is digging away at its debts.

Gross payments volume grew 75% year over year, with the company hitting $3.9 billion. The stock now looks like it should hit adjusted EBITDA profits before 2024. And analysts tended to agree. Further, with gross transaction volume (GTV) continuing to rise, we could see even more growth in this area as well.

The thing is, Lightspeed stock already went through a round of layoffs. Also, I don’t think it has the opportunity to drop one of its acquisitions over the last few years. All have been introduced into the company, and are doing quite well. And with analysts convinced the stock should hit profits by next year, there likely isn’t a need to.

To buy or not to buy?

All this could mean investors may not be as impressed with what Lightspeed Commerce stock has to say come earnings. Does it continue to beat earnings estimates? Yes! Does it continue to eat away at its debts? Also yes! But unless it’s going to bring in some huge surge of income, I’m not so sure investors will react the same way as they did to Shopify stock.

That being said, is it a buy in May, 2023? Also yes! The stock is down 24% in the last year, and continues to prove that its focus on point-of-sale and ecommerce has been worth it. What could be interesting is whether the stock is making headway at bringing on more enterprise-level clients. This could be a catalyst for a jump.

Meanwhile, shares are up 9% since Shopify stock announced earnings. So investors look like they’re on high alert for some growth. That alone could be enough to bring Lightspeed Commerce stock back from 52-week lows.

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

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