Lightspeed Commerce (TSX: LSPD) has been one of the least-appreciated Canadian tech stocks in 2023 so far. After staging a spectacular rally of more than 30% in the previous three months combined, the TSX-listed LSPD stock lost nearly 8% of its value in August to trade at $21.37 per share with $3.2 billion in market cap. By comparison, the main index on the Toronto Stock Exchange trades with a 1.4% month-to-date decline as of August 30.
In this article, we’ll look at some key fundamental factors related to Lightspeed and discuss whether it’s a good idea to consider buying LSPD stock in September 2023.
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Analyzing Lightspeed’s recent stock price movement
Lightspeed stock started 2023 on a solid note by posting 24.4% in January, delivering its best monthly performance since September 2021. This strong rally in LSPD stock could be attributed to a broader market optimism, especially in the tech sector, due to investors’ expectations that the central banks in the United States and Canada might soon ease their monetary stance and pause rate hikes. A sharp recovery in tech stocks also drove the TSX Composite benchmark up by more than 7% in the first month of the year.
However, the market optimism faded in the next couple of months, as continued inflationary pressures and mixed December 2022 quarter earnings weighed on investors’ sentiments. As a result, LSPD stock witnessed 26% value erosion between February and April, diving from $24.07 to $17.81 per share.
In mid-May 2023, Lightspeed Commerce announced its fiscal year 2023 (ended in March) financial results. During the fiscal year, the company’s total revenue rose 33.2% YoY (year over year) to US$730.5 million, despite facing currency headwinds and a challenging macroeconomic environment. Similarly, its adjusted yearly net losses stood at US$25.1 million, showcasing massive improvement over its net loss of US$53 million in the previous year. These upbeat yearly results could be one of the key factors that helped Lightspeed stock trend upward for three months between May to July 2023.
In August, however, concerns about weakening macroeconomic growth and rising treasury bond yields once again started haunting investors, driving most tech shares lower, including LSPD stock.
Is LSPD stock a buy in September 2023?
Treasury bond yields have declined in the last few sessions, comforting tech investors. Also, recently released weaker-than-expected economic data from the United States, including job openings, gross domestic product growth, and consumer confidence levels, suggest that the Federal Reserve will be more cautious in raising interest rates in the future.
While these economic indications are largely positive for tech stocks, we shouldn’t forget that macroeconomic uncertainties aren’t over yet, which can keep LSPD stock volatile in the near term. That’s why if you are looking for a stock that can yield huge returns in a very short period of time, Lightspeed stock might not be for you.
That said, recent declines in Lightspeed stock still make it look attractive for long-term investors, as the Canadian tech company’s focus on product innovation and sustainable growth continues to gradually steer it toward profitability.
