Shares of Lightspeed Commerce (TSX: LSPD) popped yet again this week from news that the company was considering going private. It’s been the latest from a long list of headlines from Lightspeed stock, though apparently it hasn’t resulted in a high share increase.
With all this going on, what might the next few years look like for Lightspeed stock? Let’s get into it.
What happened
First off, to understand the future, let’s look at the recent past. The company’s share price has stagnated over the last few years, as it looked to improve its finances. Lightspeed stock recently saw impressive results during the last quarter, with revenue increasing 27% to US$239.7 million. Furthermore, while still reporting a net loss from investments, the company had substantially lower losses compared to last year. What’s more, it managed to reported positive adjusted earnings of US$11.8 million.
However, management then came out to say that now former chief executive officer JP Chauvet would be stepping down. Instead, founder Dax DaSilva would be coming back to the role. This was to help the company increase subscriptions once more, which seriously lagged during the last earnings report.
Why go private?
The news comes as fellow point-of-sale (POS) company Nuvei stated it was in talks for a private equity buyout. So now, Lightspeed founder DaSilva is wondering if the company should do the same, and stated they’re “open to it.”
“I still believe that the stock market is a good place for Lightspeed, but when you look at what’s happening, you wonder if going private would be a better option,” Dasilva said. “We are always open to these discussions.”
Shares jumped 5% this week at the news, coming back down slightly the day after. So it seems that nothing is off the table, leading to at least more growth in the near term as DaSilva looks to bring the company back to 2021 levels.
The next five years
First off, what would it mean if a company like Nuvei or Lightspeed goes private for shareholders? Several things could happen in this instance. Typically there is a buyout offer for shareholders, buying up shares by the group or individual taking the company private. This buyout price would usually be a premium of the current market price. Shareholders can then accept the buyout, or sell shares for cash.
However, should the company continue as is, there are other factors worth noting that could happen as well. There is likely to be continued revenue growth, especially as it maintains the growth from its unified payments. Furthermore, with profitability on the table, this should allow for more growth in the areas that brought in subscribers.
Yet Lightspeed stock doesn’t have an easy path to success. There are many POS companies out there, and more competition on a large and small scale. So Lightspeed stock will need to identify why it deserves your dollar above the rest. And we’re still waiting to hear how DaSilva plans on doing just that.
