When it comes to growth stocks of the past, it’s likely that Lightspeed Commerce (TSX: LSPD) comes to mind. And it certainly should. The point-of-sale (POS) and e-commerce company has hit share prices as high as $160 in the past! And yet, since that time, shares have plummeted, down to hang around about $18 per share as of writing.
The big question now, then, is whether Lightspeed stock looks like a deal or a dud. Because if it’s a deal that could hit $160 once more, it certainly could turn some investors into millionaires.
Looking back
To see whether Lightspeed stock could hit those highs once again, we need to look at why it happened in the first place. Of course, there were macro events to consider, such as the rise in tech stocks. There was also the pandemic, which led to an increase in POS systems and e-commerce use.
Lightspeed stock gave a compelling narrative of a fast-growing company that had a huge addressable market to gain access to. Investors became drawn to the potential for significant future revenue, as well as user base expansion.
This led the company to make several major acquisitions, which added up to about US$2 billion in acquisition costs. This helped the company expand its comprehensive suite of tools that catered to physical and online businesses. What’s more, it provided even more methods to scale out its business, reaching around the globe, and beginning to focus more on enterprise-level clients.
Why the fall?
The fall also came from macro and micro factors. Lightspeed stock first saw its share price drop after a short-seller report accused the company of inflation metrics. This damaged investor confidence, causing shares to drop 30% in a day.
Yet this continued as many tech stocks began to fall across the board. The tech stock then had to shift focus to achieve profitability, which it has yet to achieve. All while many of its largest competitors have since achieved profitability, and see share prices climb higher once more.
That all being said, Lightspeed stock has seen a massive improvement in its financials. The company reported adjusted net income and an increase in average revenue per user during its most recent earnings. The company believes this will continue, especially with Lightspeed Payments providing more revenue as well.
What the future might hold
While earnings were great, showing that the company is back on track financially, analysts were disappointed to see such low subscription growth, which is why founder Dax DaSilva came back into the chief executive officer role.
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DaSilva hopes to take the company back to its roots and expand once more, though this time, subscriptions will not be added to small and medium businesses so much but to more enterprise-level clients. Not only would this create more recurring revenue, but a huge amount of it. Because once these companies are locked in, it’s unlikely that they will make a sudden cut or shift, which the stock saw from smaller businesses.
The bottom line is that Lightspeed stock still has its work cut out for it. However, it certainly has some positive factors to consider. Large businesses looking to save money by using a unified platform that also promises to expand offerings is a major benefit. And Lightspeed stock is a proven option. As a bull market comes along with the world getting out of an economic downturn, this should only increase. And that increase could lead many investors to millionaire status, especially at these levels.
