Traders watching Lightspeed Commerce (TSX:LSPD) inventory recently is likely to be rubbing their eyes in confusion. The Canadian know-how firm lately reported 1 / 4 with strong income development and a visual path to profitability, but the inventory is down greater than 22% year-to-date. Why is the market giving this fintech participant the chilly shoulder when its operational story is heating up? The reply lies in a mixture of previous stumbles and a failure to acknowledge a compelling turnaround narrative, making Lightspeed inventory one of the vital intriguing undervalued tales to observe this September.
Lightspeed’s shadow of the previous, and a clearing cloud
For a lot of buyers, the reminiscence of a pointy short-seller assault in 2021 nonetheless stings. The allegations of fabric overstatement of the enterprise’s dimension, high quality and development prospects, which the corporate has constantly denied, created a lingering stigma that has been robust to shake off. This chapter is now nearing its conclusion.
Administration has lately proposed an $11 million settlement to resolve the related class-action lawsuit, all with out admitting any wrongdoing. Whereas any settlement is a value, this transfer successfully attracts a line below a significant overhang. With a courtroom approval listening to set for November and a deadline for shareholders to decide out by October 15, the corporate is poised to place this vital distraction behind it. This clears the deck for administration to focus totally on steering the enterprise ahead — a vital step for investor confidence.
Operational firepower meets market skepticism
Peel again Lightspeed Commerce’s latest inventory worth efficiency, and also you discover a enterprise firing on most cylinders in 2025. Lightspeed’s first-quarter income for fiscal 2026 (masking the April-June 2025 interval) hit US$304.9 million, a 15% year-over-year bounce. Extra importantly, the corporate generated constructive money circulation from operations of $12.4 million, a shocking reversal from a $14.2 million outflow a yr in the past.
Lightspeed’s strategic pivot in direction of bigger retailers in North America and hospitality shoppers in Europe is working. The proof is within the newest numbers: the common income per person (ARPU) surged 16% to US$655. The corporate added 1,700 new buyer areas and now powers over 145,000 companies globally.
The launch of recent synthetic intelligence-powered options midyear 2025 may propel the corporate’s refocused and amplified go-to-market efforts in the course of the second half of 2025 and into the following yr.
Insider exercise
Regardless of Lightspeed Commerce’s promising working progress, insiders have been web sellers since June, transacting greater than a billion value of their employer’s inventory. Nonetheless, most gross sales are linked to compensation plans slightly than a vote of no confidence.
The market’s skepticism is making a evident disconnect between efficiency and valuation.
An undervalued alternative for affected person buyers?
Right here’s the place Lightspeed inventory’s story will get thrilling for potential buyers. Lightspeed is at the moment one of many least expensive and doubtlessly undervalued tech shares on the TSX. Its shares commerce at a price-to-sales a number of of simply 1.7, a large low cost to the trade common of 6.6. This valuation appears to be pricing within the firm’s shaky previous slightly than its future potential to generate sustainable money circulation.
The corporate may develop into free money circulation constructive in 2026. If it hits its double-digit development targets for 2026, together with rising income by 10-12% and boosting its annual adjusted EBITDA (a measure of core profitability that stands for earnings earlier than curiosity, taxes, depreciation, and amortization) to US$72 million, the present inventory worth may appear like a steal in hindsight.
Lightspeed Commerce inventory represents a basic alternative for long-term-oriented buyers: a essentially enhancing enterprise quickly shackled by outdated unfavorable information. As soon as the stigma fades and the money circulation story takes centre stage, this undervalued inventory could possibly be poised for a big re-rating.
