Lightspeed Commerce Inc. (LSPD - Get Rating) is an all-in-one commerce platform that enables merchants to innovate to simplify, grow, and provide exceptional consumer experiences. Its cloud commerce solution changes and combines online and physical operations, multichannel sales, new location growth, global payments, financial solutions, and supplier network connectivity.

The company’s shares have lost 52.8% year-to-date and 77.8% over the past year to close its last trading session at $19.09. A short report from Spruce Point, a deteriorating macro environment, and tough comparisons are the reasons why LSPD has slumped so much.

Here’s what could shape LSPD’s performance in the near term:

Inadequate Financials

LSPD’s revenue increased 77.9% year-over-year to $146.56 million for the fourth quarter ended March 31, 2022. However, its operating loss grew 163.9% from the year-ago value to $113.85 million.

The company’s net loss surged 172.4% from the prior-year quarter to $114.52 million. In addition, its net cash used in operating activities came in at $87.22 million.

Negative Profit Margins

LSPD’s trailing-12-month gross profit margin of 49.5% is 2.4% lower than the industry average of 50.7%. Also, its trailing-12-month ROA, ROC, and net income margin are negative 7.9%, 5.9%, and 52.6%, respectively. Moreover, its trailing-12-month negative EBITDA margin of 35.6% compares to its industry average of 12.9%.

POWR Ratings Reflect Bleak Outlook

LSPD has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight different categories. LSPD has a D for Stability and Quality. The stock beta of 3.03 is consistent with the Stability grade. In addition, its poor profitability is in sync with the Quality grade.

Of the 55 stocks in the C-rated Software – Business industry, LSPD is ranked #52.

Beyond what I’ve stated above, you can view LSPD ratings for Value, Growth, Momentum, and Sentiment here.

Bottom Line

While LSPD continues to profit from digital transformation initiatives, macro challenges hinder the stock’s recovery. Furthermore, analysts expect its EPS to decline by 120% in the current quarter ended June 2022 and remain negative.

Also, the stock is currently trading below its 50-day and 200-day moving averages of $22.25 and $38.14, respectively, indicating a downtrend. So, we think the stock is best avoided now.

How Does Lightspeed Commerce Inc. (LSPD) Stack Up Against its Peers?

While LSPD has an overall D rating, one might want to consider its industry peers, Amdocs Ltd. (DOX - Get Rating), which has an overall A (Strong Buy) rating and Citrix Systems Inc. (CTXS - Get Rating), and VMware Inc. (VMW - Get Rating), which have an overall B (Buy) rating.

LSPD shares were trading at $17.96 per share on Tuesday morning, down $1.13 (-5.92%). Year-to-date, LSPD has declined -55.58%, versus a -16.79% rise in the benchmark S&P 500 index during the same period.

About the Author: Pragya Pandey

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate. More...

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