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Shopify (SHOP) Hits 52-Week High on Robust Top-Line Growth

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Share price of Shopify Inc. (SHOP - Free Report) rallied to a new 52-week high of $106.90, eventually closing a tad bit lower at $106.53 on Aug 24. Notably, the stock has returned a massive148.5% year to date, substantially outperforming the 19.6% gain of the industry it belongs to.

The momentum can be attributed to strong top-line growth over the last 12 months. In the recently concluded quarter, revenues increased 75% from the year-ago period to $151.7 million, comfortably surpassing the Zacks Consensus Estimate of $143 million. The figure was also better than management’s guided range of $142-$144 million.

Shopify also raised its 2017 top-line projection. Management now projects revenues in the range of $642-$648 million, up from earlier guidance of $615-$630 million. For third-quarter 2017, the company projects revenues in the range of $164-$166 million.

Currently, Shopify has a Zacks Rank #3 (Hold). Notably, the stock has a market cap of $7.99 billion.

Key Factors

We believe that the massive growth in e-Commerce spending bodes well for Shopify. The company’s cloud-based platform is well positioned to address the growing needs of merchants at a time when social media, cloud computing, mobile devices and data analytics are transforming the e-Commerce market place.

Shopify Inc. Revenue (TTM)


Shopify Inc. Revenue (TTM) | Shopify Inc. Quote

Shopify continues to win new merchants, which surpassed 0.5 million at the end of the quarter. Visa (V - Free Report) , Frito-Lay, Jones New York, BuzzFeed, Elvis Presley, Canadian Tire and The New York Times are some companies that launched stores on Shopify in the reported quarter.

Moreover, availability of Apple Pay and addition of eBay (EBAY - Free Report) , Amazon and Facebook Messenger as sales channels are significant positives.

However, the company’s increasing investments on product development, infrastructure and platform will continue to hurt profitability at least in 2017.

Estimate Revisions

The Zacks Consensus Estimate for fiscal 2017 has narrowed to a loss of 5 cents from a loss of 15 cents over the last 30 days, as all of the 14 analysts raised their estimates.

For fiscal 2018, earnings estimate has increased to 22 cents from 15 cents over the same period of time, as 10 out of 14 analysts raised their projections.

Stock to Consider

Etsy (ETSY - Free Report) , carrying a Zacks Rank #2 (Buy), is a better-ranked stock in the same sector. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Etsy is currently pegged at 20%.

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