Shopify is the IBD Stock of the Day as the e-commerce software and services provider trades in a tight range after popping on its September-quarter earnings. SHOP stock has gained 78% in 2023.
Canada-based Shopify sets up e-commerce websites and partners with others to handle digital payments and shipping. Also, Shopify recently announced the launch of a new subscription plan tailored for physical retailers.
SHOP stock holds a conventional buy point of 67.60 from a double-bottom base. The double-bottom base looks sort of like the letter W. It features two distinct sell-offs.
"We look ahead to Shopify's Dec. 5 analyst day where we hope to glean details on the company's levers to drive future top-line growth and
operating leverage to sustain the free cash flow growth required to justify the current lofty valuation," Morgan Stanley analyst Keith Weiss said in a recent note to clients.
Shopify Stock: Technical Ratings
On the stock market today, SHOP stock rose 1.6% to close at 62.34.
Meanwhile, Shopify stock has an IBD Relative Strength Rating of 94 out of a best-possible 99, according to IBD Stock Checkup. Further, SHOP stock also holds a perfect IBD Composite Rating of 99.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. Also, the best growth stocks have a Composite Rating of 90 or better.
Shopify stock has an Accumulation/Distribution Rating of B. This rating analyzes price and volume changes in a stock over the past 13 weeks of trading. SHOP's current rating indicates more funds are buying than selling. The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Shopify Earnings Top Estimates
Shopify reported third-quarter earnings and revenue that topped analyst estimates as its merchant business turned in a strong quarter.
Earnings for the quarter ended Sept. 30 were 24 cents per share, swinging to a profit from a 2-cent loss a year earlier. Shopify's revenue rose 25% to $1.7 billion.
Analysts expected Shopify to report a profit of 15 cents a share on revenue of $1.67 billion.
Shopify said third-quarter gross merchandise volume from merchant transactions rose 22% to $56.2 billion vs. estimates of $54.27 billion. Merchant solutions revenue rose 24% to $1.2 billion, in line with estimates.
"We believe Shopify's out-performance is a function of overall-stable consumer and small and medium-sized businesses trends second half 2023 to date, as well as company-specific improvements," Goldman Sachs analyst Gabriela Borges said in a recent note.
SHOP Stock: Logistics Business Sold
The company recently sold its delivery and logistics business to Flexport, easing Wall Street worries over rising capital spending.
Flexport will be Shopify's logistics partner under a revenue-sharing arrangement. Shopify now holds a 13% equity interest in Flexport.
Among merchant services is Shop Pay. It's an accelerated checkout option for stores on the Shopify platform.
Shopify Capital provides loans to merchants. The new Shop Cash rewards program provides consumers with incentives, aiming to boost GMV through higher orders.
Also, the company targets big companies with its premium-priced Shopify Plus services.
Shopify rivals include BigCommerce.
Started in 2006, Shopify in May launched a program called Commerce Components. It enables businesses to integrate Shopify's checkout and back-office services with their existing online platforms.
Follow Reinhardt Krause on X, formerly called Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
