Up by 9.85%: Is Lightspeed Commerce Stock a Good Buy in February 2024?

While up by almost 10% from its 52-week low, Lightspeed (TSX:LSPD) stock is still far from its all-time high. Yet, it might be a good holding to consider today.

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Canadian tech stocks fell deeply out of favour among Canadian investors ever since the bubble burst and the resulting industry-wide decline. There was a time not too long ago when Canadian tech stocks became synonymous with growth stocks.

However, it feels like a distant memory to some. With all the volatility plaguing the market today, many investors are actively avoiding tech stocks.

That said, avoiding all tech stocks without giving them a thought is not a wise approach to investing. Despite significant downturns from all-time highs, several tech stocks deserve some love from investors.

If you look closely, some Canadian tech stocks have strong underlying businesses that warrant keeping them as long-term holdings in their portfolios. To this end, Lightspeed Commerce Inc. (TSX:LSPD) is one of the top names that come to mind.

Today, we will discuss Lightspeed Commerce stock to help you understand whether it might be a good buy right now.

Lightspeed Commerce

Over the past several quarters, Lightspeed stock has seen significant improvements to its financial status. It has expanded its revenue forecast, and it continues to steamroll toward profitability. And yet, the growth stock’s share price has barely improved from its 52-week lows.

Lightspeed stock began suffering from a declining share price a little while before the industry-wide selloff frenzy. A short-seller report in September 2021 saw the stock drop sharply by 30% within a day. With the selloff following soon after, its share prices never really had the chance to recover.

The question is: Is it time to get back into Lightspeed stock? Or is it better for you to remain on the sidelines to see what happens this year with its share prices?

Moving forward

Lightspeed Commerce stock reported its third-quarter earnings recently, and the results were better than anticipated.

The company did not just meet, but it beat its earnings estimates across the board. The company’s Unified Payments expansion jumped, with almost a third of its clients using the new platform. That said, investors and analysts were far more concerned with other parts of its earnings report.

Lightspeed Commerce reported a US$40.2 million net loss, and its subscription revenue increased by only 9% year over year in the quarter. These factors can be attributed to the almost 30% drop in share prices between February 7 and February 12.

However, the chief executive officer, JP Chauvet, is hopeful about the company’s progress. The total revenue increased by 25% year over year, bringing in over US$230 million in the quarter. Its net loss was half the loss it reported in the same quarter last year.

Additionally, Lightspeed stock reached positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in the quarter. While it was a nominal $200,000 profit, it is a massive improvement from a forecasted $4 million loss in its EBITDA.

Foolish takeaway

After exceeding its goals in what turned out to be a profitable quarter for the company, Lightspeed Commerce stock looks far more attractive than it ever has before. As of this writing, Lightspeed stock trades for $18.61 per share. With a solid outlook for the future and gaining strength in its financial performance, it can be an excellent holding for growth-seeking investors.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Lightspeed Commerce. The Motley Fool has a disclosure policy.

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