There were quite a few tech stocks that took off during the pandemic. One of them, of course, was Nuvei (TSX: NVEI), with shares of the company surging by almost 275% between its initial public offering (IPO) and all-time highs.
Yet since then, shares have dropped further and further and further. Now, if you had purchased at the time of the IPO, that $500 would be down to about $390 as of writing. And that would hurt, considering, at one point, it was worth about $1,858.
Even so, there has been some positive movement over the last few months — slow but positive. It might have some investors questioning whether now is the time to get back in on Nuvei stock. So, here is what I would consider before jumping back in.
What happened?
First off, let’s look at why shares jumped off in the first place. There was a lot of hype around the company, with Nuvei stock receiving a significant initial rise from its IPO price. After the initial jump, there was some volatility as investors considered whether it was indeed a solid long-term hold.
There were a few industry-specific factors as well. This included the payment processing industry seeing a shift as consumers reigned in cash. What’s more, tech stocks saw a major drop in share price starting back in 2022.
Then there were earnings. The company still has to report its fourth-quarter and full-year earnings. However, during the third quarter, the company managed to see a huge improvement. Revenue increased by 55% to US$304.9 million, with adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) climbing 36%. However, its net loss hit US$18.1 million, compared to US$13 million in income the year before. Plus, adjusted net income fell by 9% during the quarter.
Still, investors were pleased to see that North America saw revenue grow 100% in the quarter, with Latin America up 81%. And there are continuing growth initiatives also underway. So, what’s next for the stock?
A rebound on the way?
What will need to happen before Nuvei stock can truly recover is the recovery of the market. There needs to be more global economic growth, especially where Nuvei stock operates. More consumer spending would mean more activity, after all. Furthermore, lower interest rates and inflation would also lead to less pressure on spending.
As for the company itself, Nuvei stock will need to set itself apart from other payment processing companies. This will likely come down to initiatives in technology, pricing and customer service. Plus, it will mean spending on product development and innovation, and that could be a hard balance in the near term.
Still, there are partnerships and acquisitions that the company could also try out. This would immediately help enter new markets and try new products, improving overall efficiency. Yet one thing I personally like about the stock is that it continues to have the same chief executive officer (CEO).
Philip Fayer has been the CEO since its start in 2003. That means he’s been through thick and thin with the company, especially in terms of economic performance. Fayer holds over 20 years of experience in the electronic payments industry, seeing the company establish itself as a leader in over 150 currencies.
Bottom line
Overall, Nuvei stock doesn’t look expensive at these levels. What’s more, shares are lower than when they came on the market! While Nuvei stock is down 17% in the last year, it’s climbed 94% since bottoming out back in October.
If Nuvei stock can continue to improve its future performance, with stable profit and revenue, as well as expand through acquisitions and new markets, it could be a huge winner for investors today, especially for when the market recovers.
