Shopify stock price had a strong week, rising by over 11%, as investors cheered the recent Donald Trump election and the ongoing earning season. SHOP jumped to a high of $87.12, its highest point since February this year. It has jumped by over 255% from its lowest point since 2022.
Shopify stock has soared after the last earnings
Shopify is one of the most technology infrastructure company in the world since it helps to power millions of websites globally.
With its technology, one can build a complex website within a few minutes. Most importantly, it has a substantial market share in a highly competitive industry. Some of its most notable competitors are firms like Amazon, Wix, WooCommerce, and BigCommerce.
Shopify’s business has been growing in the past few years as its revenue jumped from $1.5 billion in 2019 to over $7.76 billion in the trailing twelve months (TTM).
This growth has happened because of the stable number of companies on its platform and its ability to upsell them. For example, in addition to transaction revenue, Shopify sells other solutions to customers like logistics, marketing, and point of sale.
Shopify’s solutions are so strong such that it has attracted some high-profile customers on its platform like Spanx, Glossier, Kylie, Heinz, and Rebecca Minkoff. Some of its most recent additions wre firms like Away, Grove, QVC, and Barners & Noble.
The challenge for Shopify is how to continue adding more large companies since most of them gave existing providers.
The most recent financial results showed that its revenue jumped by 21% in the second quarter to $2 billion as the number of unique online shoppers on its platform growing to $675 million.
This revenue growth happened as the gross merchandise volume rose by 22% to $67.2 billion. The Merchant Solutions revenue rose by 19% to $1.5 billion, while subscriptions jumped to $563 million.
Read more: Shopify stock price forecast: Morgan Stanley sees a 20% upside
SHOP earnings ahead
The next important catalyst for the Shopify stock price will be its upcoming earnings, which will provide more information about its growth.
According to Yahoo Finance, analysts believe that Shopify’s revenue rose to $2.93 billion in the third quarter. The highest estimate is $3.01 billion, while the lower estimate was $2.9 billion.
For the year, analysts believe that its revenue will be $12 billion, a 24% increase from 2023. It will then be followed by $14.48 billion in 2025.
Shopify’s earnings will likely be better than what analysts expect since its guidance is usually highly conservative.
The company’s profits are expected to continue growing. Analysts see its earnings per share rising to 37 cents, while its annual EPS will be $1.53.
A key concern for Shopify has been its valuation. It has a forward P/E ratio of 78.92, higher than the sector median of 25. It is also higher than the S&P 500 average of 21.
Its premium valuation is mostly because the company has a long record of growth, and the fact that it has the potential for higher margins. Its gross margin stands at 51%, while its EBIT and net income margins stood at 12% and 16%, respectively.
Shopify stock price analysis
The daily chart shows that the SHOP share price has done well in the past few months and is approaching the key resistance point at $91.5, its highest swing on February 9.
The stock has formed a golden cross pattern, one of the most bullish patterns in the market. It has also moved to the strong pivot reverse part of the Murrey Math Lines pattern. The stock has also formed an inverse head and shoulders pattern.
Also, the Relative Strength Index (RSI) and the MACD indicators have pointed upwards. Therefore, a cross above the key resistance level at $91.5, will point to more gains, potentially to the extreme overshoot point at $112.5, which is 32% higher than the current level.
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