SHOP - Shopify: FCF Milestone Is A Game Changer (Rating Upgrade)
2024-02-14 08:34:13 ET
Summary
- Shopify beat earnings and top line estimates. But shares sold off following a Q1'24 outlook that was regarded as disappointing.
- However, the e-Commerce company achieved double-digit top line momentum in both core businesses.
- Shopify is now free cash flow profitable, generating $90M in FCF in FY 2023 and achieving double-digit FCF margins.
- Shares are not expensive, but FCF profitability is a game changer for the e-Commerce company.
E-Commerce company Shopify ( SHOP ) submitted a better than expected earnings scorecard for the fourth-quarter on Tuesday. However, the e-Commerce company’s shares fell more than 13% as the company’s outlook for the first fiscal quarter disappointed. Shopify generated double-digit gross merchandise volume and experienced sustained revenue momentum in the fourth-quarter, due to the inclusion of the typically strong holiday period. While Shopify obviously is not cheap with a P/S ratio of 10.0X, I believe the e-Commerce company’s shares should not have dropped 13% after achieving free cash flow profitability for FY 2023. I believe the business is growing at a healthy rate and shares have become more attractive on the sell-off!...
Shopify: FCF Milestone Is A Game Changer (Rating Upgrade)