We’re back at it with these comparative articles between the two heavyweight e-commerce stocks. Shopify (TSX: SHOP) and Lightspeed Commerce (TSX: LSPD) were the top choices among these tech stocks back in the pandemic. Investors saw their shares surge. However, with that climb came a major drop when the market dropped tech stocks and pandemic stocks like a burning piece of coal.
Yet now, the market is starting to shift. Even so, shares of Shopify stock have climbed, while Lightspeed stock hasn’t. So, let’s see if investors know something we don’t or if one is seriously valued.
Shopify
Shares of Shopify stock surged this year as the tech stock focused back on its bread and butter, and that was e-commerce. The company sold its logistics business to Flexport, with a 13% stake in the company. It also went through massive layoffs, bringing more cash on the books.
That focus seems to have paid off, with Shopify stock seeing more and more growth in terms of revenue, gross transaction volume, and more earnings after earnings. It also continues to beat out earnings estimates, with more expected in the near future.
This comes just as Shopify stock had an investor day, where analysts learned that the stock will remain focused on e-commerce growth. However, not all analysts were impressed on the investor day, with a pair of analysts downgrading the stock. This led to a drop of about 5% in share price when the review came out.
The e-commerce stock now looks like the recent share price appreciation might be near fair value, if not exceeding it. While Shopify stock will continue to be a favourable stock to hold in the future, shares have already risen 86% in the last year as of writing. That’s enormous growth that isn’t likely to continue at this clip in the new year. So, with shares trading above fair value, there should be limited growth even if the stock continues its expansion process.
Lightspeed
Meanwhile, Lightspeed stock looks like it has plenty of room to grow. But should it? The e-commerce stock also made some big moves in the last year, on top of the ones already made over the last several years. Yet the stock made so many moves that the focus became quite convoluted. This is why, lately, analysts and investors have been more interested.
After its major acquisitions, Lightspeed stock has now moved into a profit. Further, it recently passed a $1 billion run rate. Now, the focus is on unified payments for its large clients. The stock already has 25% of its clients using Lightspeed Payments, and hopes to achieve 50% in the next 18 months to two years
Today, Lightspeed stock looks deeply undervalued. That’s according to analysts who also went to an investor conference for the stock recently. Analysts called the stock “cleaner” and “better positioned” after there was skepticism on whether it could achieve that payment penetration management hoped for.
Therefore, shares of Lightspeed stock should certainly outperform in the future, even beyond Shopify stock. As the company continues to streamline its business, consolidate its tech platforms, increase unified payments, and bring in more profit, there shouldn’t be a problem reaching breakeven earnings before interest, taxes, depreciation and amortization in 2024. From there, the sky is the limit. Between the two, I’m thinking Lightspeed stock is the better buy today.
