Back in 2021, it didn’t seem as though Lightspeed Commerce (TSX:LSPD) would ever come down. The tech stock had risen to prominence as it was swept up in the ecommerce craze. But fast forward to today, and the company hasn’t seen its shares rise above $30 since July 2022.
But that looks as though it’s about to change. Especially if investors begin to have more cash on hand as interest rates and inflation lower. So let’s look at why this stock has a great chance of making millionaires.
Some history
Lightspeed has now been around for almost 20 years. The company started out as a point-of-sale stock, expanding to ecommerce software for its retail businesses, eventually expanding to the hospitality industry as well.
The company came on the market with a bang, marking the best tech initial public offering (IPO) in years. Lightspeed raised $200 million in 2017 through venture-capital funding. It then went on to trade on the TSX in 2019, raising $240 million, and going on to raise US$397.7 million in the United States the next year.
From there, the stock became an acquisition powerhouse. It acquired over US$2 billion of businesses in a little over a year. And that’s when things started getting shaky. It wasn’t clear whether Lightspeed had overbought. Add in falling tech stocks and a short seller report, and the company saw shares absolutely collapse.
Proven worth
The thing is, fast forward and you’ll see that the company’s acquisitions were a strong move. Lightspeed bought these companies when its market capitalization was far higher than it is today. It had the equity to spend, and it spent it wisely.
In fact, Lightspeed has since posted a positive adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) as of its latest quarter. That’s something other ecommerce companies cannot claim. Total revenue climbed 25% to $230.3 million as well. Furthermore, gross transaction volume (GTV) hit $23.5 million, and gross payment volume $5.9 billion, up 59% year over year.
What’s more, the stock also rolled out its Unified Payments, with the goal of having 50% of its clients using the method within the next two years. Given that 25% already use it, this seems quite doable. And would add in even more revenue for the company.
Strong outlook
So we have a company now offering a profit, taking on enterprise-level companies around the world, and expecting more revenue growth from its payments platform. This now looks like a company achieving immense success. So why aren’t investors buying?
Unfortunatley, the company’s history seems to be weighing it down. The short seller report is one thing, but the company also wasn’t as clear about the future as it now seems to be. Unified Payments are an easy revenue stream that investors can hang onto. And it’s why this provides a strong reason for investors to buy going into 2024, according to analysts.
The stock has proven that it can put out higher payment penetration without raising costs and still providing discounts. It’s now “cleaner” and “better positioned” in the words of one analyst. So after all that buying, it’s clear the company wants to be the go-to option for enterprise-level, retail, and hospitality companies around the world.
Bottom line
Lightspeed stock now offers a huge opportunity for investors. The stock is looking to breakeven or better for the full-year of 2024. That should accelerate quickly from there. Lightspeed stock believes this as well, posting a strong outlook for the future.
Third quarter results should bring in between $232 million to $237 million, with adjusted EBITDA of $2 million. Further, full-year results should reach $890 to $905 million, with adjusted EBITDA breaking even or better. So is now the time to buy? Absolutely. And who knows, maybe you could become one of the millionaires made by this stock.
