What’s Going on With Lightspeed Stock?

Lightspeed (TSX:LSPD) stock has been climbing once more but is still far from its three-digit share price. So, is it worth a buy?

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Lightspeed Commerce (TSX:LSPD) may not be back at the three-digit share price it enjoyed back in 2021. But returning chief executive officer (CEO) Dax Dasilva is working on it.

Shares of Lightspeed stock have been climbing again and again as news hits headlines over and over. First, it was the return of the founder and former CEO, who’s now back in the top position for good. Then it was strong earnings. Now, it’s a deal with Uber Technologies (NYSE:UBER) that has investors even more excited.

But when it comes down to it, is Lightspeed stock a valuable buy headed towards high-growth status again, or is it just trying to make the news?

The news

First, let’s get into the news and why investors were so excited about it in the first place. Lightspeed shares recently surged around 16% after the company reappointed its founder, Dax Dasilva, as permanent CEO and reported a 25% increase in sales for the fourth quarter. The stock had been down approximately 33% over the year but rebounded strongly following this news.

The company reported a net loss of US$32.5 million for the fourth quarter, which is an improvement from the previous year’s net loss of US$74.5 million. Revenue increased to US$230.2 million, up from US$184.2 million the previous year.

That improvement also included future guidance. Lightspeed stock expects sales to grow by at least 20% next year and anticipates adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to reach at least US$40 million, up from US$1.3 million this year. This would also come from cost-cutting measures, as the company has laid off 280 employees to reduce operational expenses by approximately 10% and plans to find further efficiencies outside of headcount reductions.

New lines of growth

That’s all well and good for the past, and cost-cutting is certainly great, but Dasilva has also been working on new growth measures. In particular, he made it clear during an interview with the Motley Fool that software sales growth was going to be a key focus.

Meanwhile, the company recently saw another surge in share price from the partnership with Uber Eats. Lightspeed stock has partnered with Uber to integrate Uber Eats and Uber Direct into its platform, providing merchants with enhanced delivery options and the potential to tap into new markets.

The deal is seen as a huge move by Lightspeed stock, and with such a headline-grabbing name as Uber, it will likely build more investor confidence. This could lead to even more household names using the platform as well.

Analysts weigh in

Overall, analysts have been quite positive after the results and recent news. Top analysts in Canada have given the company an “outperform” rating, encouraged by the focus on profitable growth and aligned guidance. In the United States, the company also has a “buy” rating from many analysts. And this has come from positive earnings estimates revisions, coupled with outperformance in the broader market.

So, is it a buy? Altogether, there are certainly pros and cons to consider. After all, Lightspeed stock has been volatile, with a significant drop earlier in the year due to conservative forward guidance. What’s more, despite improvements, the company is still reporting net losses, which may concern some investors.

That being said, there are even more pros. The 25% increase in sales and improvement in net loss figures indicate a positive trend. Reappointing founder and former CEO Dax Dasilva could provide stability and a clear strategic direction. Effective cost-cutting measures and plans to find further efficiencies suggest a disciplined approach to profitability. And, of course, the partnership with Uber and the focus on increasing software and financial services sales could drive future growth.

Bottom line

So, given the recent positive developments, improved financial performance, strategic focus on profitable growth, and supportive analyst ratings, Lightspeed stock appears to be a promising investment. 

However, potential investors should consider past volatility and ongoing economic uncertainties before making a decision. As always, further research and monitoring upcoming financial results and market conditions will be crucial for informed investment decisions.

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 Amy Legate-Wolfe has positions in Lightspeed Commerce. The Motley Fool recommends Lightspeed Commerce and Uber Technologies. The Motley Fool has a disclosure policy.

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