Shares of e-commerce firm Shopify soared Thursday after the company reported a smaller-than-expected loss for the September quarter and revenue that topped analyst estimates. SHOP stock was up by double digits on the news.
Canada-based Shopify said it lost 2 cents per share on an adjusted basis. Revenue for SHOP stock rose 22% to $1.4 billion, the company said. Revenue growth reaccelerated after six quarters of slowing growth due to the coronavirus pandemic fading and online shopping normalizing.
Analysts expected Shopify to report a loss of 7 cents on revenue of $1.34 billion. A year earlier, Shopify earned 8 cents per share on revenue of $1.12 million. Third-quarter results included recently acquired logistics firm Deliverr.
SHOP stock surged 17.3% to close at 34.10 on the stock market today. Prior to Thursday, Shopify stock had retreated 78% in 2022 amid the bear market.
"Results showed SHOP stock is not out of the woods, but is making positive progress," Jefferies analyst Samad Samana said in a note to clients.
SHOP Stock Exceeds Expectations
At D.A. Davidson, analyst Tom Forte said in his note to clients: "On 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 its point-of sale efforts."
He added that Shopify "may have benefited from the strength in the U.S. dollar versus the Canadian dollar with its revenues in U.S. dollars and many of its operating expenses in Canadian dollars."
At Evercore ISI, analyst Mark Mahaney said in his note: "Shopify is showing that it is willing to manage down expenses – through layoffs and marketing spend discipline – in order to protect profits or minimize losses. Which is exactly what the markets want these days."
Also, gross merchandise volume from merchant customers came in at $46.2 billion, up 11%, slightly below estimates of $46.87 billion.
Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping.
Meanwhile, the company plans to cut 10% of its workforce. SHOP stock holds a Relative Strength Rating of 13 out of a best-possible 99, according to IBD Stock Check-up.
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