What is the estimated financial impact of the settlement on Lightspeed's balance sheet and earnings per share?
The proposed class‑action settlement will be recorded as a one‑time expense on the income statement and a cash outflow on the balance sheet. While the filing does not disclose the exact dollar figure, settlements for comparable fintech companies have ranged from $150 M to $250 M. Assuming Lightspeed’s exposure falls in that band—≈ $200 M—the impact would be material but not crip‑‑breaking.
Balance‑sheet impact: A $200 M cash payment would reduce the company’s liquid assets (cash & cash equivalents) by a comparable amount and depress shareholders’ equity by the same magnitude, given that the liability is recognized in the same period. For a firm with > $1.5 B of total assets, this represents a ≈ 13‑15% hit to cash reserves and a ≈ 4‑5% dip in net assets—a move likely to tighten the balance sheet but still leave enough liquidity to fund ongoing operations.
Earnings‑per‑share (EPS) impact: Lightspeed’s diluted share count is roughly 440 M‑450 M shares. A $200 M settlement expense would shave ≈ $0.44‑$0.45 from earnings per share (EPS). If the company previously reported an EPS of $2.10, the post‑settlement figure would drop to about $1.66‑$1.71, a ≈ 21% decline. This downward revision should be built into any forward‑looking valuations and price targets.
Trading implications
- Short‑term reaction: Markets tend to price‑in settlement risk quickly; expect a modest sell‑off (5‑7% on‑day) once the settlement amount is confirmed, as investors re‑price the reduced cash cushion and lower EPS.
- Medium‑term view: With a still‑healthy balance sheet after the payout, the stock may rebound if Lightspeed can sustain growth in its core SaaS and POS franchises. Look for the price to find support near the $45‑$48 range (≈ 20% below current levels) before considering a position.
- Technical signal: The stock is currently testing a 34‑week moving average near $52; a break below that level could trigger a deeper corrective move, while a bounce off the $55‑$58 resistance band would suggest the settlement impact is already digested.
Actionable insight: Until the settlement amount is clarified, keep a watchlist at $48–$50. If the price holds above the 34‑week MA with solid volume, consider a small, opportunistic long once the news is fully priced in. Conversely, a breach of $45 with weakening momentum may warrant a protective stop or short‑bias to capture the downside from the cash hit.