Store Inventory: Shopify Wins Profits, Revenue Growth Re-accelerates

E-commerce company shares Shopify (a store) rose Thursday after the company reported a smaller-than-expected loss for the September quarter and revenue beat analyst estimates. SHOP stock soared in double digits on the news.




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Canada-based Shopify said it lost two cents per share on an adjusted basis. The company said SHOP’s stock revenue rose 22% to $1.4 billion. Revenue growth accelerated after six quarters of slowing growth due to the fading of the coronavirus pandemic and the normalization of online shopping.

Analysts expected Shopify to post a loss of 7 cents in revenue of $1.34 billion. A year ago, Shopify earned 8 cents per share on revenue of $1.12 million. Third-quarter results included the recently acquired logistics company Deliverr.

SHOP stock rose 17.3% to close at 34.10 in stock market today. By Thursday, Shopify stock was down 78% in 2022 amid a bear market.

“The results show that SHOP’s stock is not finished yet, but is making positive progress,” Samad Samana, an analyst at Jefferies, said in a note to clients.

Share Store Exceeds Expectations

At DA Davidson, analyst Tom Forte said in his note to clients: “On the first blush, we see Shopify’s sales exceeding expectations for the September quarter as a reflection of its ability to exploit not only the online e-commerce opportunity but also the offline retail one; for example, With POS efforts.”

He added that Shopify “may have benefited from the strength of the US dollar against the Canadian dollar with its revenue in US dollars and many of its operating expenses in Canadian dollars.”

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At Evercore ISI, analyst Mark Mahaney said in his note: “Shopify is showing its willingness to manage expenses – through layoffs and discipline marketing spending – in order to protect profits or reduce losses. Which is exactly what markets want these days.”

Also, the total volume of merchandise from commercial customers was $46.2 billion, an increase of 11%, just below the estimate of $46.87 billion.

Shopify sets up e-commerce sites for small businesses, partnering with others to handle digital payments and shipping.

In the meantime, the company plans to cut 10% of its workforce. SHOP stock has a relative strength rating of 13 of the 99 best possible, according to IBD stock check.

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