CA - Shopify Q1: Irrational Sell-Off Creates Entry Opportunity

2024-05-15 16:51:12 ET

Summary

• Shopify beat earnings estimates for Q1, with adjusted EPS and revenues surpassing expectations.
• A slightly weak forecast for Q2 caused Shopify's shares to slide, but double-digit top line growth and a strong Subscription Solutions business indicate long-term value.
• Strong revenue and GMV momentum as well as growing FCF margins make Shopify an attractive investment opportunity.

E-commerce company Shopify ( SHOP ) reported earnings for its first fiscal quarter last week that beat adjusted EPS and top line estimates, but that nonetheless caused a stock slide due to the company submitting a weak forecast for its second-quarter. I believe investors are overreacting to the revenue guidance, especially since the company is still seeing double-digit top line growth in gross merchandise value, a key performance metric for e-Commerce companies. Additionally, Shopify’s Subscription Solutions business is crushing it with a 34% year over year top line growth rate. I believe Shopify continues to represent strong value for e-Commerce investors in the long haul, especially now that shares have sold off!...

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