Daily Stock Opinions and Ratings

Opinions

Stockchase Insights Shopify Inc. SHOP-T BUY Aug 07, 2024

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

SHOP reported EPS of 26c beating estimates of 20c and growing from 14c in the year prior. Revenue was $2.05B growing 21% (or 25% adjusting for the sale of the logistics business) year-over-year and beating estimates of $2.01B. Q3 revenue growth forecast is in the low-to-mid 20% range where analysts projected $2B (approx 17% growth). Gross Merchandise Volume (GMV) increased 22% to $67.2B. Merchant solutions increased 19% (to $1.5B) and subscription solutions increased 27% (to $563M) year-over-year. MRR increased 25% to $169M, driven by growth in merchants. Gross profit dollars grew 25% to $1.0B. Gross margin for the quarter was 51.1% compared to 49.3%. Free cash flow margin was 16% compared to 6% a year prior. This was a good 'get-right' quarter for SHOP following the prior weakness. Growth was driven by higher GMV, increased merchants, and increased penetration of Shopify Payments while profitability continued to expand. Guidance met expectations as well and we are happy with the results.
Unlock Premium - Try 5i Free

Stockchase Insights

Unknown

Unlock Rating

$87.870

Stock price when the opinion was issued

It's the ideal tool to help you make quicker, more informed decisions for managing and tracking your investments.

Get Signals Create your Watchlist

You might be interested:

BUY ON WEAKNESS

Growth company that hasn't been smashed, despite coming down from highs. Flirting with getting into the NASDAQ 100; if it goes down there, will be a lot more buying. Last quarter earnings were good, subscription revenue up, and executing well. But it's pricey.

Must-own name, but you have to buy it at the right level. Very whippy, use the technicals to buy.

DON'T BUY

Not ready to buy. Stock's suffered, but still not cheap. Lots of growth is built into the share price. If recession, consumers will stop buying or buy less. He'd prefer AMZN, quite frankly.

DON'T BUY

Valuation is 61x forward PE with 25% growth, giving a PEG ratio of well over 2x. 200-week MA is trending lower, which is not a fantastic technical sign. Have to watch out for rivals such as AMZN and ETSY. Depends more on small-and mid-sized businesses, which can be affected more by any economic downturn.

COMMENT

A Canadian stock that will be a major beneficiary of AI.

BUY ON WEAKNESS

Look at the 5-year chart. The peak in 2021 concerns him on valuation. Not surprising that it came into resistance when it entered a similar window earlier this year. Likes buying dips, don't chase here.

TOP PICK

Fine job in utilizing AI, becoming more efficient. Cosmetics and clothing are two of its bigger channels, and these are among the easiest to switch supply chains. This makes those segments relatively less impacted by trade and tariff volatility. No dividend.

(Analysts’ price target is $159.57)

DON'T BUY

No idea if there's more upside. Very expensive. Doesn't have the consistency he looks for. Better opportunities at better prices elsewhere.

BUY

AMD vs. Shopify

Prfers SHOP. AMD is fully priced. He targets $125 USD for SHOP. Don't sell AMD, just raise some calls against it.

COMMENT

It is growing at 20% per year but trading at 100X earnings so there is a valuation risk. It is a good company but not so much the stock. It uses different software for different vendors and expanding internationally. It could go sideways or down.

TRADE

Very high valuation. On any fears of potential slowing, stock moves quite a bit. People probably trade it a lot. Great company, democratizing e-commerce for everybody. Tariffs may impact volumes until we get more clarity.

Most Recent Experts