A Fresh Look at Lightspeed Commerce (TSX:LSPD) Valuation Following $11 Million Settlement Over Growth Claims

Lightspeed Commerce (TSX:LSPD) is making headlines once again, this time for agreeing to a CAD 11 million settlement after accusations it misled investors on growth metrics, customer numbers, and how it compares to competitors. The news traces back to a short-seller’s claims that Lightspeed had been portraying a more optimistic picture of its fundamentals than some believed was warranted. While the company denies any wrongdoing, this agreement is intended to compensate shareholders affected by the resulting share price decline, with the settlement now awaiting court approval.

For investors trying to make sense of the bigger picture, it is hard to ignore how this event ties into a turbulent chapter for Lightspeed. The stock’s performance over the past year has been lackluster, eking out just over 1% growth, with a year-to-date slide of about 26%. Three- and five-year returns remain firmly in negative territory. Despite posting annual revenue growth above 10% and a recent double in reported net income, the long-term trajectory has largely been weighed down by doubts about whether the company’s narrative matches its actual results.

All this raises the central question: after a tough year and in the wake of the settlement, does the current price reflect a new baseline for Lightspeed, or could there be hidden value if markets have become too pessimistic?

Most Popular Narrative: 20.9% Undervalued

The dominant narrative among analysts points to Lightspeed Commerce being significantly undervalued. This perspective anticipates strong growth drivers and margin improvement, suggesting a gap between current price and potential value.

Consistent product innovation, including AI-powered insights and deeper e-commerce integration, drives higher software ARPU, increases upsell opportunities, and reinforces customer retention. These factors can have a positive impact on future revenue and gross margin.

What is fueling this bold valuation? There is one crucial financial leap in the projections that changes the entire future outlook. If you want to know the exact growth metric analysts believe will bridge the gap to fair value, you have to see what is driving these eye-opening numbers and assumptions.

Result: Fair Value of $21.28 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent losses and heightened competition from industry giants could derail Lightspeed’s outlook. These factors may pressure margins and challenge future growth assumptions.

Find out about the key risks to this Lightspeed Commerce narrative.

Another View: What Does Our DCF Model Suggest?

Taking a different angle, our SWS DCF model also sees Lightspeed as undervalued and suggests the stock might be trading below its true worth. However, it is important to consider whether this outlook would hold if conditions change.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Lightspeed Commerce for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Lightspeed Commerce Narrative

If you have a different perspective or want to dig deeper into the numbers on your own terms, you can easily craft your own narrative and reach an informed view in just a few minutes. Do it your way

A great starting point for your Lightspeed Commerce research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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