Why Shopify Popped 14.9% Last Week
Shares of Shopify (NYSE: SHOP) popped 14.9% last week, according to data from S&P Global Market Intelligence. The all-in-one e-commerce platform for individuals and businesses posted strong revenue growth in its third-quarter report, beating Wall Street's expectations.
Shopify reported its third-quarter earnings last Thursday morning. Revenue grew 22% year over year to $1.37 billion, which was better than the consensus analyst estimate of $1.33 billion. The company is not generating a profit today (although it did in 2020 and 2021), booking an operating loss of $345 million in the period. Current investors don't seem to mind though, and with the stock down around 80% this year, revenue growth expectations were likely low heading into the release.
How is Shopify growing its revenue even amid a global economic slowdown? First, the number of merchants using the platform to power their e-commerce sites continues to rise, which boosted its subscription revenue by 12% year over year to $376.3 million. Second, shoppers continue to spend more money at those merchants' websites, and Shopify takes a cut of sales through its payment processing services. In the third quarter, merchant solutions revenue increased 26% year over year to $990 million.
Source Fool.com
