Shopify (SHOP) stock jumped out of the gate Tuesday after the e-commerce technology company beat top- and bottom-line expectations for its third quarter and provided a strong outlook for its fourth quarter.
In the three months ended September 30, Shopify's revenue increased 26.1% year over year to $2.2 billion, boosted by a 24% surge in gross merchandise volume (GMV) to $69.7 billion. Its net income nearly doubled from the year-ago period to $344 million.
"Q3 was outstanding, further establishing Shopify as a leader in powering commerce anywhere, anytime," said Shopify President Harley Finkelstein in a statement. "Our unified commerce platform is becoming the go-to choice for merchants of all sizes."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results topped analysts' expectations. Wall Street was anticipating revenue of $2.1 billion and net income of $332 million, according to Investor's Business Daily.
For the fourth quarter, Shopify said it expects to achieve revenue growth at a mid-to-high-twenties percentage rate from the prior year, which is well ahead of the 23% year-over-year growth rate analysts are anticipating.
"As the busiest shopping season of the year for our merchants approaches, they trust Shopify to provide the tools, unmatched speed, and reliability to maximize their success," Finkelstein said.
Is Shopify stock a buy, sell or hold?
Shopify has outperformed the broad market in 2024, up nearly 43% for the year to date vs the S&P 500's roughly 26% gain. And Wall Street remains bullish on the tech stock.
According to S&P Global Market Intelligence, the consensus recommendation among the 52 covering analysts it tracks is a Buy.
However, analysts' price targets have struggled to keep up with the large-cap stock's surge in 2024. Indeed, the average price target of $82.58 represents a steep discount to current levels. However, analysts may very well raise their price targets on SHOP following the company' strong earnings results.
Financial services firm Oppenheimer has an Outperform rating (equivalent to a Buy) on Shopify stock.
"Shopify has established itself as a fast-growing, pure play software-as-a-service (SaaS) Commerce application vendor that is taking share of retailer technology spend," said Oppenheimer analyst Ken Wong in an August 7 note. "We think Shopify is well led by a visionary and respected management team and are confident in its multi-year growth potential. Shopify is a generational technology disruptor in a large and underpenetrated Digital Commerce opportunity."
Related Content
-
IRA Rules at a Glance: Contribution Limits, Income Limits and Rollover OptionsHere are IRA contribution limits, income limits and rollover rules for Roth, traditional, SIMPLE and SEP IRAs at a glance.
-
How to Delete Your 23andMe Data23andMe is pursuing a sale after filing for bankruptcy, leading many customers to look into deleting their data from the company.
-
How to Delete Your 23andMe Data23andMe is pursuing a sale after filing for bankruptcy, leading many customers to look into deleting their data from the company.
-
What Is a Medallion Stamp? The Requirement for Transferring SecuritiesTransferring securities from one account to another often requires this extra step.
-
Would You Benefit From Investing in Cryptocurrency?Understanding the complexity of adding digital currency to your investments is critical, especially since drastic price changes can happen very quickly.
-
Why Company Stock May Be Riskier Than Employees RealizeStock compensation has its perks, but employees must be realistic (and unemotional) about their investments' prospects. Sometimes strategic sales are smart.
-
Can You Be Fired for Going to Work When You're Contagious?What's an employer to do when an employee shows up at the office with a cold or the flu and spreads germs to co-workers?
-
Stock Market Today: Markets Celebrate Trump's Tariff DétenteConsumer discretionary stocks led 10 of the 11 S&P 500 sector groups well into the green.
-
Social Security Fairness Act: Five Financial Planning Issues to RevisitMore money as a public-sector retiree is great, but there could be unintended consequences with taxes, Medicare and more if you're not careful.
-
Social Security Warning: Five Missteps Too Many Women MakeClaiming Social Security is complicated, and for women the stakes are high. What you don't know can cost you, so make sure you do know these five things.
