Lightspeed (TSX:LSPD) Is up More Than 400%: Here’s Why I’m Still Buying – The Motley Fool Canada

The Canadian stock market went on a very strong bull run in November. After the market dropped by 5% alone in October, it has come roaring back in November. The S&P/TSX Composite Index was up almost 10% by mid-month. 

Even as social-distancing policies tighten up in many provinces across the country, the positive news surrounding a COVID-19 vaccine has sent the market way up. We’re definitely not out of the woods yet, but the recent bull run shows many investors believe the worst might actually be behind us.

In addition to the positive vaccine news, we’ve also seen the tech industry gain momentum over the past month. The large gains from tech stocks, such as Lightspeed POS (TSX:LSPD)(NYSE:LSPD), have contributed to the recent bull run. 


This tech stock has been a public company for not even two years yet, but it’s created all sorts of attention for itself, especially over the past six months. A run of more than 400% in less than a year could do that, though.

Since the beginning of 2020, Lightspeed is up about 75%, which has crushed the returns of the Canadian market. But since the market bottomed out at the end of March earlier this year, the tech company has seen its share price grow by more than 400%. 

Share price growth of 400% doesn’t come without its risks. The company trades at a very high valuation today, as the expectation is that the tech stock will continue to deliver monster growth for the foreseeable future. The stock trades today at a price-to-sales ratio of 40. 

Why the best has yet to come for Lightspeed

Lightspeed presented its 2021 Q2 earnings report earlier this month, which sent the stock soaring. Results were announced before the market opened on November 5, and the stock closed the day with a gain of more than 15%. 

The quarter was led by impressive growth in revenue and total customer locations. Revenue jumped 45% year over year, and customer locations now total 80,000. The number of locations grew almost 70% year over year and more than 20% from 2021 Q1. 

Management discussed on the call how acquisitions will play a major role in the company’s future growth. Lightspeed acquired Australian-based Kounta at the end of 2019 as an entry into the APAC-region. In early 2020, German-based Gastrofix was acquired to strengthen the company’s presence in the European market. 

Most recently, Lightspeed purchased a leading commerce platform in the U.S., Shopkeep, for almost half-a-billion dollars. The company commented that the Shopkeep acquisition will provide both an experienced team and a robust presence among small- and medium-sized businesses in the U.S.  

Foolish bottom line

If you’re investing in Lightspeed stock today, you should be prepared for a bumpy ride, at least in the short term. This incredible bull run cannot last forever, but there’s no reason to believe that this stock won’t continue to outpace the returns of the Canadian market for many more years.

For investors worried about a potential pullback in the near term, you can simply start by investing half the amount you initially had planned to. If the stock does drop right after you bought shares, you’ll be glad you didn’t fully commit with all of your money, and you can pick up shares now at a lower price.

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Fool contributor Nicholas Dobroruka owns shares of Lightspeed POS Inc. The Motley Fool owns shares of Lightspeed POS Inc.

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