Shopify Stock or Lightspeed Commerce?

Written by Jed Lloren of The Motley Fool Canada

Shopify (TSX:STORE) i Trading at the speed of light (TSX:LSPD) are two of Canada’s hottest tech stocks today. They both operate in the retail sector, so their activities overlap to some extent. For this reason, some investors may decide to buy shares of only one company. In this article, I will discuss which one would be a better buy today.

Information about these two companies

Shopify is one of the largest players in the global e-commerce industry. It provides sellers of all sizes with a platform and many tools necessary to run online stores. Today, over a million merchants use Shopify. This applies to large-cap companies such as Netflix.

Lightspeed is a point of sale (POS) and e-commerce software provider. The company’s activities can be divided into three distinct groups: clothing, restaurant and golf. Within each group, Lightspeed offers a completely different suite of solutions that can help small and medium-sized businesses achieve their retail goals. SpaceX is one of the most impressive companies reported to be using Lightspeed’s services.

Let’s look at each business

Shopify is by far the larger of the two companies when it comes to revenue. In Q1 (Q1) 2023, Shopify reported revenue of $1.5 billion. This revenue is generated by the millions of merchants who rely on Shopify solutions around the world. Investors should note that Shopify is still led by its founder, Tobi Lütke. This is very noteworthy because it has previously been shown that founder-led companies tend to outperform non-founder-led stocks.

Lightspeed reported revenue of $184.2 million for the fourth quarter of 2023 (these stocks have different fiscal calendars). Lightspeed operates in over 100 countries around the world and serves approximately 168,000 customer locations. Although Lightspeed is no longer led by its founder Dax Dasilva, its current CEO has been with the company for over a decade. This should give investors confidence that the company is led by a very capable person.

Which one would I buy today?

In my opinion, Shopify is a more intriguing lineup today. Its business is much larger than Lightspeed, and the company has a very strong position at the top of the global e-commerce market. While I think Lightspeed has the potential to be a solid lineup in the coming years, I’d be much more comfortable putting my money into Shopify stock today.

Other investors seem to largely agree, as Shopify’s stock has significantly outperformed Lightspeed’s stock over the past six months. Shopify’s stock has risen approximately 76.5% over this period. By comparison, Lightspeed only gained about 14% over the same period. The difference in the performance of these two companies becomes greater the further you go. Shopify shares are up approximately 103.5% over the past year. However, Lightspeed lost 23.3%.

If I could only invest in one of these stocks today, I would choose Shopify. I think it’s definitely a better buy today. However, given how intriguing Lightspeed’s business is, I’d say it’s worth keeping an eye on.

Lent Better Buy: Shopify Stock or Lightspeed Commerce? appeared first on The Motley Fool Canada.

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Stupid co-worker Jed Lloren has positions at Shopify. The Motley Fool covers and recommends Shopify. The Motley Fool recommends Lightspeed Commerce and Netflix. The Motley Fool has a disclosure policy.

2023