Earnings season is upon us again, and we will be seeing plenty of developments for some of the biggest names in the stock market. Lightspeed Commerce (TSX: LSPD) is one tech stock many investors will have their eyes on. May 16 will see Lightspeed Commerce release its annual earnings report, and there will be much to look at for investors interested in the stock.
As of this writing, Lightspeed stock trades for $18.68 per share. This is surprising stability in its share prices, considering the drastic changes happening at the company. From its founder returning to his role in the company as the chief executive officer (CEO) to a lot of layoffs in the company to cut costs, investors are wondering what to expect.
What has happened to Lightspeed?
As of this writing, Lightspeed trades at a massive 34.98% discount from its 52-week high. It has remained down for a long while. The $2.88 billion market capitalization tech firm offers cloud-based commerce platforms for large and enterprise-level businesses.
Lightspeed primarily focuses on businesses in the retail and restaurant segments. Starting as a company offering point-of-sales solutions, Lightspeed has transformed into a firm that helps its clients compete more effectively.
Despite boasting a lot of promise, Lightspeed stock fell from grace in 2022, right before the broader tech sector meltdown. A short-seller report said that the company’s gross merchandise volume (GMV) was dubious, and it was not doing as well as it represented. The report resulted in a drastic drop in share prices. Coupled with the industry-wide selloff, Lightspeed stock still has not recovered.
How is the company doing?
The company’s former CEO, Jean-Paul Chauvet, initiated a substantial turnaround for the company in his tenure. He unified the company’s previous acquisitions into excellent product offerings.
Under his guidance, the company began focusing on larger and better-established merchants, improving revenue quality. The moves also promoted cross-selling for different Lightspeed products, particularly payment solutions.
Lightspeed appears to be doing much better now. The company’s revenues are rising, and it is reducing its operating losses. While it will still take time for it to achieve the break-even point for its operations, Lightspeed has the momentum to get there now. The company’s restructuring exercises in April 2024, which included letting go of 10% of its workforce, reinforced this belief.
Share-buyback plans
Lightspeed also plans to repurchase 10% of its common stock on the open market. This will amount to around $192 million worth of shares.
This is the maximum number of shares it can buy back in a year. It means the company would likely want to repurchase more shares if possible. It also shows that management believes the company is undervalued at current levels.
Foolish takeaway
Lightspeed has a balance sheet full of cash. Cash comprises almost 60% of the company’s identifiable assets. The company’s decision to repurchase the maximum number of shares that regulations allow means management is hopeful about a turnaround.
While we await the full picture in its upcoming earnings report, there might be reason enough to believe that Lightspeed stock is a good buy at around $18 per share. If you are looking for growth stocks to add to your self-directed portfolio, Lightspeed stock might warrant a place in your holdings.
