SHOP- Shopify

Shopify the e-commerce giant, where companies are founded and flourish daily, came to my attention when my father informed me that he was in fact down a tremendous amount on it in his portfolio. During this time, most of the market was on a downslope, and I quickly started to look into Shopify and what the company entails. At that moment, Shopify started to form an up trend, creating higher, highs and higher lows, this cooped up with the fact the company just reported some astounding earnings pushing it to reach 40 bucks from 29, where the company created a base for the past couple months, made me have a premature consensus that it would head higher. This wasn’t backed up by any background research of the company, but the look it presented to me on the market, and fortunately for not just me, but ultimately my dad it has splurged up to the mid-80s. I can positively say my dad made a pretty penny from this investment, but I dont think it’s over just yet for Shopify. 

Every month the news for Shopify just keeps on getting better. It’s as if that one NBA player you have been watching since the rookie year just can’t seem to slow down and improve slightly, but surely every year, establishing his case as an MVP candidate. And when he gets the MVP, he is supposed to cap out and slow down, but he still manages to improve the next year. As I’m writing this, Shopify seems to be on its MVP run while continually improving as we go. 

I bet you’re asking yourself, Why in the world Shopify is exploding on the scene? And, What are the catalysts that are the major factors for its success?

Well, firstly the earnings have been nothing short, but amazing, the first of the string of amazing news came in October of 2022, which started the initial uptrend. Everything was glowing across Shopify’s dashboard, every single aspect was green. Some major ones are the total revenue growing 22%, Monthly Recurring Revenue which amassed over an 8% gain, and way more. It was not just revenue, but the addition and expansion of the company that later could have contributed to its catapulting to the sky. They expanded their wings by implementing and having Shopify payments accessible to over 22 more countries. As well as the launch of Shopify Collabs and Pos Go. Then, just a month later, merchants, who are people who purchase items on Shopify-run businesses, broke new records for sales on both Cyber Monday and Black Friday with a total of 7.5 billion dollars in sales!

Then, as 2023 rolled around, the first quarter report was out and they still were onto brilliant things, not slowing down a single bit, seeing an increase in many attributes of the company in the first quarter of 2023, with most of the aspects still having a pretty nice bump up. Shopify still wasn’t content with that, they launched commerce components (CCS) for enterprise retail, combining foundational components and flexible APIs. An AI shopping assistant, powered by OpenAi’s ChatGPT API, debuted on Shop App, Shopify partnered with Intuit for point-of-sale solutions. Pinterest joined as an advertising channel for Shopify audiences, driving ads on Meta Google and Pinterest. Around a couple of months later, they finalized a sale of Shopify logistics to Flexport. 

The next quarter preceding quarter 1, was still great but had a massive operating loss, the revenue was still at highs, and the creativity throughout Shopify was at a peak with boundless new additions to the website. Even with that massive operating loss, the company still managed to keep the cash flow positive, for the third consecutive quarter, which was pretty big. Some of the Business highlights include Shopify Magic, Shopify Collective, Shopify Marketplace Connect app, Shopify Checkout expansion, Shop Pay installments, and Shop Cash Rewards program. All trying to create an easier and more navigable time for the merchant and the business owner.

With all these decent earnings previously mentioned, the company stayed stationary staying between $45-60 per stock, and it needed some breakthrough catalyst to push it to a new level. This needed news came around in the 3rd quarter, setting them on pace to heights of $83 through the span of a month. All across the board, there was an increase between 20-25% in almost all aspects of the business which created an insanely high gross profiting month for the company. 

With all these fabulous earnings coming out for Shopify, it doesn’t mean their done working or enhancing their product. These people are made a compelling write-up for what they expect and what is in store for the 4th quarter. In these forward-looking statements, they explained how the company anticipates full-year revenue growth in the mid-twenties percentage range YoY. Excluding the impact of the sale of the logistics businesses, the YoY growth rate is expected to be in the low to mid-twenties. The fourth quarter gross margin percentage is projected to be 300 to 400 basis points higher than the fourth quarter of 202, due to the absence of the logistics business. The operating expenses are expected to lower, the stock-based compensation is estimated to be around $100 million in the 4th quarter. As well as in the 4th quarter the free cash flow as a percentage of revenue is projected to be in the high teens, reflecting ongoing improvements in both margin and dollars, showcasing the company’s focus on long-term profitability. 


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