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ETFs to Tap as Shopify Pops 22% on Stellar Earnings & Rosy Forecast

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Shopify Inc. (SHOP - Free Report) , provides a multi-tenant, cloud-based, multi-channel commerce platform, delivered a surprising third-quarter financial performance, surpassing analysts' expectations on both the top and bottom lines.  Stock jumped 22.4% on Nov 2, 2023, on four times higher volume.

Adjusted earnings per share settled at 24 cents, a noteworthy leap from the Zacks Consensus Estimate of 15 cents. Revenue followed suit, coming in at $1.71 billion against the Zacks Consensus Estimate of $1.67 billion.

Robust Full-Year Revenue Guidance

Shopify has guided its 2023 revenues to climb at a mid-twenties percentage rate year-over-year. This optimistic prediction is underpinned by an anticipated high-teen percentage growth in fourth-quarter revenue, as quoted on CNBC.

Gross Merchandise Volume Growth

Shopify's Gross Merchandise Volume (GMV), a key metric for the platform's total sales volume, experienced a robust 22% increase to $56.2 billion during the quarter. This figure comfortably exceeded the FactSet analysts' forecast of $54.2 billion, signaling a strong seller and consumer activity on the platform, as quoted on CNBC.

Leadership's Commentary

Shopify's Chief Financial Officer, Jeff Hoffmeister, highlighted the resilience and efficiency of the company's business model. He emphasized the dual achievement of top-line growth and profitability, with a free cash flow margin that reached an impressive 16%.

Strategic Cost Focus and Partnerships

Following an intensive focus on cost control, including a workforce reduction by 20% in May and a strategic divestiture of its logistics unit to Flexport, Shopify's financial discipline seems to be paying dividends. Furthermore, the quarter was marked by notable strategic moves, including a partnership with Amazon and an investment in Faire, positioning Shopify favorably within the e-commerce ecosystem.

ETFs to Benefit

Shopify's robust third-quarter results and upbeat full-year guidance have greatly enhanced investor confidence, as evidenced by the significant rise in stock price. The stock has considerable exposure to several ETFs. These ETFs are also likely to gain ahead on Shopify’s robust outlook.

ARK Fintech Innovation ETF (ARKF - Free Report) – SHOP has 8.24% exposure

ARKF is an actively managed ETF that seeks long-term growth of capital. It seeks to achieve this investment objective by investing under normal circumstances primarily (at least 80% of its assets) in domestic and foreign equity securities of companies that are engaged in the Fund’s investment theme of financial technology (“Fintech”) innovation. The fund charges 75 bps in fees. The fund was up about 6.8% on Nov 2, 2023.

First Trust Dow Jones International Internet ETF (FDNI - Free Report) – SHOP has 7.28% exposure

The underlying Dow Jones International Internet Index is a float-adjusted market capitalization weighted index designed to measure the performance of the 40 largest and most actively traded non-U.S. international companies in the Internet industry that are engaged in internet commerce and internet services. The fund charges 65 bps in fees. The fund was up about 4.2% on Nov 2, 2023.

Bitwise Web3 ETF (BWEB - Free Report) – SHOP has 6.35% exposure

The underlying Bitwise Web3 Equities Index provides focused exposure to the equity securities of companies that are well-positioned to benefit from the emergence of Web3 and Web3 technologies. The fund charges 85 bps in fees. The fund was up about 1.2% on Nov 2, 2023.

Franklin Disruptive Commerce ETF (BUYZ - Free Report) – SHOP has 5.39% exposure

This ETF is active and does not track a benchmark. The Franklin Disruptive Commerce ETF seeks capital appreciation by investing in innovative companies benefitting from transformation in the e-commerce space. The fund charges 50 bps in fees. The fund was up about 1.3% on Nov 2, 2023.

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