Lightspeed Stock: Should Investors Buy or Sell Before Earnings?

Lightspeed (TSX:LSPD) stock has gone through a lot the last few years, but could things be turning around come earnings?

| More on:
stock research, analyze data

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings season continues, and Lightspeed Commerce (TSX:LSPD) is one of the next hopefuls in the near future. With earnings coming up for Aug. 1, 2024, investors are likely hoping for more movement. With a reversal back to Chief Executive Officer Dax Dasilva and ongoing partnerships, what else can Lightspeed stock do to attract investors?

The thing is, insiders continue to load up on Lightspeed stock, demonstrating they may know something we don’t. With that in mind, let’s look at whether it might be better to buy or sell Lightspeed stock ahead of earnings.

Created with Highcharts 11.4.3Lightspeed Commerce PriceZoom1M3M6MYTD1Y5Y10YALL6 Apr 20203 Apr 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '252021202120222022202320232024202420252025050100150200www.fool.ca

Buy

First, let’s go over what’s made Lightspeed stock a better performer. Lightspeed’s total revenue for the third quarter of 2024 was $239.7 million, reflecting a 27% year-over-year increase. This growth surpassed previously established outlooks and highlights the company’s ability to expand its market presence and drive sales​.

The company reported a net loss of $40.2 million, which is a significant improvement from the previous year’s net loss of $814.8 million. This reduction in losses, coupled with an adjusted profit of $11.8 million, indicates Lightspeed’s successful efforts in streamlining operations and enhancing profitability.

Lightspeed’s strategy of shifting customers to its integrated payment software is proving beneficial. Although this transition has been slower in Europe and Asia-Pacific compared to North America, it’s expected to enhance customer retention and generate higher margins in the long run​.

Lightspeed’s revenue is expected to grow by over 23% this year, reaching approximately $1.12 billion, with further growth anticipated in the following years. Earnings per share (EPS) are forecasted to rise significantly, from $0.33 this year to $0.52 next year, indicating strong financial health and growth potential.

With a focus on the hospitality and retail sectors, Lightspeed has substantial room for growth. The company’s expansion into new geographic markets and continuous improvement of its product offerings are expected to drive long-term growth and profitability.

Sell

As mentioned, there are a few red flags. Despite improvements in financial performance, Lightspeed continues to report net losses. For the fiscal year ending March 31, 2024, the company reported a net loss of $164 million. Although this is a significant improvement from the previous year’s net loss of $1.07 billion, the ongoing losses remain a concern​​. In the most recent quarter, the net loss was $32.5 million, highlighting that the company is still struggling to achieve profitability on a consistent basis​.

The company faces significant macroeconomic challenges, including potential interest rate hikes and tepid consumer sentiment. These factors can negatively impact overall gross transaction volume (GTV), a key revenue driver for Lightspeed. The company has acknowledged the potential risks and remains cautious about near-term economic conditions, which could affect its growth trajectory and financial stability​.

Plus, the market for point-of-sale (POS) and payment solutions is highly competitive, with numerous established players and new entrants vying for market share. Lightspeed’s efforts to consolidate its market position and transition customers to its integrated payment solutions are commendable, but the competitive landscape poses ongoing risks to its market share and pricing power.

Bottom line

Right now, if you’re to listen to analysts, Lightspeed stock looks like a hold. Analysts are cautious about macroeconomic factors, such as potential interest rate hikes and weak consumer sentiment, which could negatively impact Lightspeed’s transaction volumes and overall financial performance.

As mentioned, Lightspeed operates in a highly competitive market with numerous established players and new entrants. This competition could pressure Lightspeed’s market share and profitability, making it harder for the company to achieve and sustain strong financial results​.

Add in a mixed financial outlook and ongoing strategic moves, and the company doesn’t look exactly steady. While there are positive aspects such as revenue growth and strategic initiatives, ongoing financial losses, competitive pressures, and uncertain economic conditions temper enthusiasm. Investors should then watch Lightspeed’s progress closely and consider both the opportunities and challenges the company faces.

Should you invest $1,000 in BlackBerry right now?

Before you buy stock in BlackBerry, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and BlackBerry wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Tech Stocks

Canada day banner background design of flag
Tech Stocks

The Top Canadian Stock to Buy With $5,000 in 2025

There are few Canadian stocks out there that offer the outlook of this tech stock, bound for more growth.

Read more »

ways to boost income
Tech Stocks

How I’d Invest $11,500 in Canadian Fintech Stocks to Revolutionize My Finances

Propel Holdings stock's recent dip could be a trading opportunity for long-term financial gains. Here's why the fintech stock is…

Read more »

Start line on the highway
Tech Stocks

Where I’d Invest $5,000 in Growth Stocks With Long-Term Potential Through 2030

DO you have $5,000 to invest to grow your wealth over the long term? These growth stocks could deliver strong…

Read more »

A shopper makes purchases from an online store.
Tech Stocks

Buy the Dip on the Return of Recession Stocks?

If a recession comes back, there are some stocks that could fair well afterwards. And this is one of the…

Read more »

data center server racks glow with light
Tech Stocks

April Opportunity: Where I’d Invest $7,000 in These 3 Tech Stocks Right Now

These tech stocks have solid growth potential and are trading at discounted valuation, providing a solid buying opportunity in April.

Read more »

The letters AI glowing on a circuit board processor.
Tech Stocks

If I Could Only Buy and Hold a Single U.S. Stock, This Would Be It

You don’t need 40 different stocks to build wealth. A few good ones can boost your portfolio, and this U.S.…

Read more »

cloud computing
Tech Stocks

2 Top Canadian Information Technology Stocks to Buy Right Now

These two Canadian information technology stocks are bargains amid the downturn in the broader market for long-term investors.

Read more »

A microchip in a circuit board powers artificial intelligence.
Tech Stocks

The Only 2 AI Stocks You’ll Need for Long-Term Growth

Here are two top Canadian tech stocks that could help you benefit from surging demand for AI technology and infrastructure.

Read more »