Lightspeed Commerce (TSX:LSPD) impressed investors by rallying nearly 46% in the fourth quarter of 2023 to $27.82 per share. This rally marked LSPD stock’s strongest quarter with double-digit gains since it started tanking in September 2021 after a New York-based short seller, Spruce Point Capital, targeted Lightspeed and its management in a severely critical report.
But is the recent sharp recovery in Lightspeed stock enough to regain investors’ confidence and help it continue climbing in the years to come? Before we discuss that, let’s take a closer look at some key fundamental factors that could be responsible for driving it higher in recent months.
Lightspeed stock
After tanking by nearly 78% in 2021 and 2022 combined, Lightspeed stock started 2023 on a fairly positive note, with its share prices surging 16% in the first half of the year. However, as macroeconomic concerns amid growing geopolitical tensions continued to haunt investors, the Canadian stock market witnessed another round of weakness in the third quarter of the year, with the main TSX benchmark shedding nearly 3% of its value. This broader market weakness took a big toll on growth stocks.
As a result, Lightspeed stock, which witnessed a gradual recovery in the previous two quarters, also turned negative again, slipping by about 15% in the third quarter.
Nonetheless, Lightspeed stock staged a spectacular recovery in the fourth quarter of the year with growing hopes that the central banks in the United States and Canada are gearing up to start easing their monetary stance in the next year with early signs of easing inflation. This optimistic factor and LSPD’s significantly better-than-expected September quarter financial results could be the two primary reasons why Lightspeed stock jumped 45.8% in the final quarter of the calendar year 2023.
Surprisingly strong financial performance
Even as the ongoing economic slowdown has badly affected the financial growth of many global tech firms of late, Lightspeed’s financial growth trends still look impressive. In fact, in the second quarter of its fiscal year 2024 (ended in September 2023), the Montréal-based, one-stop commerce platform provider’s total revenue rose 25.4% YoY (year over year) to US$230.3 million. Interestingly, this revenue figure was even higher than the company’s guidance range of US$210 million to US$215 million.
With the help of strong 36% YoY growth in its transaction-based revenue, Lightspeed surprised investors and Street analysts by posting its first quarter of positive adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). Notably, its adjusted EBITDA in the September quarter stood at US$0.2 million, significantly better than its guidance of an adjusted EBITDA loss of around US$4 million.
Where will Lightspeed stock be in three years?
After reporting strong financial performance in recent quarters, its management now expects Lightspeed to continue inching closer to break even or better performance going forward. The company’s focus on innovative, market-responsive products, expanding payment solutions, strategic customer acquisition, and improving financial health brighten its long-term growth outlook.
While it’s nearly impossible for anyone to predict exactly where Lightspeed’s stock price will be in three years, these positive fundamentals lay a strong foundation for financial growth, which could help its share prices soar in the years to come. Also, despite its recent rally, we shouldn’t forget the fact that Lightspeed stock is still down over 80% from its peak level.
