Shopify SHOP shares jumped 21% on Nov. 12 after the Canadian e-commerce company posted better-than-expected results for the third quarter and gave an optimistic forecast for the holiday shopping season. Shares of SHOP gained another 5.7% on Nov. 13 as investors’ optimism continued.
The stock has a Zacks Rank #2 (Buy). SHOP shares belong to top-ranked (top 25%) Zacks Internet - Services industry and top-ranked (top 13%) Zacks Computer and Technology sector. SHOP’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average earnings surprise being 24.50%.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Inside the Headlines
Shopify reported third-quarter 2024 non-GAAP earnings of 36 cents per share, beating the Zacks Consensus Estimate by 33.33%. SHOP reported earnings of 24 cents per share in the year-ago quarter. Revenues of $2.16 billion surpassed the Zacks Consensus Estimate by 2.59%. The top line soared 26.1% year over year.
Shopify sells software for merchants who run online businesses as well as services such as advertising and payment processing tools. The company has been investing heavily in marketing in recent months. In the third-quarter, Shopify became the first commerce integration partner for Roblox RBLX.
Alphabet GOOGL division YouTube expanded its partnership with Shopify to bring more brands for its YouTube Shopping affiliate program. Shopify has also diversified its Payments product offerings through an expanded partnership with PayPal PYPL.
SHOP’s Q4 Guidance Positive
For the fourth quarter of 2024, Shopify expects revenues to grow at a mid-to-high twenties percentage rate on a year-over-year basis. Shopify expects GAAP operating expenses as a percentage of revenues to be 32% - 33%.
The Zacks Consensus Estimate for fourth-quarter 2024 revenues is pegged at $2.24 billion, indicating year-over-year growth of 20.58%. The consensus mark for earnings is pegged at 25 cents per share, suggesting 25.0% growth year over year.
The Zacks Consensus Estimate for SHOP’s 2024 revenues is pegged at $8.63 billion, indicating year-over-year growth of 22.18%. The consensus mark for earnings is pegged at $1.12 per share, marking a year-over-year growth of 51.35%.
Shopify-Heavy ETFs in Focus
Against the above-mentioned backdrop, while one can invest directly in Shopify, leveraging the exchange-traded fund (ETF) route to purchase the stock could be a prudent approach. By doing so, investors can mitigate specific risks associated with individual companies.
Notably, Shopify holds significant weight in various technology-focused ETFs. In the event of a potential Federal Reserve rate cut in December and likely positive outcomes from Shopify's strategic initiatives, these ETFs could see favorable impacts.
ARK Fintech Innovation ETF ARKF – Shopify’s weight 8.71%
First Trust Dow Jones International Internet ETF FDNI – Shopify’s weight 8.27%
Bitwise Web3 ETF BWEB – Shopify’s weight 7.74%
Sterling Capital Focus Equity ETF LCG – Shopify’s weight 7.53%
Franklin Disruptive Commerce ETF BUYZ – Shopify’s weight 5.59%
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Alphabet Inc. (GOOGL) : Free Stock Analysis Report
PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report
Shopify Inc. (SHOP) : Free Stock Analysis Report
First Trust Dow Jones International Internet ETF (FDNI): ETF Research Reports
ARK Fintech Innovation ETF (ARKF): ETF Research Reports
Roblox Corporation (RBLX) : Free Stock Analysis Report
Bitwise Web3 ETF (BWEB): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
