Shopify Stock Is Choppy After Forecasting Slower Revenue Growth
Shopify stock is struggling for direction Tuesday as investors weigh the e-commerce tech company's Q4 earnings results against its Q1 revenue guidance.
Shopify (SHOP) stock opened higher Tuesday after the e-commerce technology company reported a top-line beat and in-line earnings for its fourth quarter. However, shares were last seen in negative territory as Wall Street weighs SHOP's revenue forecast.
In the three months ending December 31, Shopify's revenue increased 31.2% year over year to $2.8 billion. Its earnings per share (EPS) rose 26.5% from the year-ago period to 43 cents.
"We are thrilled with our strong performance in Q4, wrapping up an outstanding 2024. Q4 marks our seventh consecutive quarter of 25% or greater revenue growth when excluding logistics," said Shopify Chief Financial Officer Jeff Hoffmeister in a statement. "These consistent results are a testament to our strategic initiatives and operational discipline, positioning us well for continued success and growth in the future."
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The results beat analysts' expectations. Wall Street was anticipating revenue of $2.7 billion and earnings of 43 cents per share, according to Investor's Business Daily.
Shopify also said gross merchandise volume (GMV) increased 25.7% year over year to $94.5 billion, topping the $93 billion in GMV analysts were calling for.
For the first quarter, Shopify said it expects revenue to be up in the mid-twenties percentage rate compared to the year-ago period. While this is in line with the 25% growth rate Wall Street is expecting, it is slower than what was seen in Q4, which could be the cause of today's price struggles.
"Heading into 2025, we are committed to making entrepreneurship more common and further establishing Shopify as the go-to commerce platform for businesses of all sizes," said Shopify President Harley Finkelstein in a statement.
Is Shopify stock a buy, sell or hold?
Shopify has done well on the price charts over the long term. Indeed, SHOP is up 32% in the past 12 months vs the S&P 500's total return (price change plus dividends) of 22%. And Wall Street is bullish on the tech stock. According to S&P Global Market Intelligence, the consensus recommendation among analysts it tracks is a Buy.
However, analysts' price targets have struggled to keep up with large-cap stock's run higher. Currently, the average price target of $122.83 is right around where the stock trades today.
Financial services firm Oppenheimer is one of those firms with an Outperform rating (equivalent to a Buy) on SHOP stock, along with a $130 price target.
"Shopify has established itself as a fast-growing, pure-play SaaS [software as a service] commerce application vendor that is taking share of retailer technology spend," wrote Oppenheimer analyst Ken Wong in a November 12 note. "We think Shopify is well-led by a visionary and respected management team and are confident in its multi-year growth potential."
Wong adds that SHOP "is a generational technology disruptor in a large and underpenetrated digital commerce opportunity."
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