Shopify’s Merchant Business Growth Leads to Exceeding Earnings and Revenue Estimates in SHOP Stock

Shopify Beats Earnings Expectations, But 2024 Revenue Guidance Sends Stock Price Tumbling

Shopify (SHOP) reported fourth-quarter earnings and revenue that beat analyst estimates, with its merchant business having a strong quarter. Despite this, SHOP stock fell sharply as analysts considered the company’s 2024 revenue guidance.

The Canada-based company reported fourth-quarter earnings of 34 cents, excluding one-time items, and a 24% increase in revenue to $2.1 billion, both beating analyst estimates. Analysts had anticipated a profit of 30 cents a share on revenue of $2.07 billion, based on data from Visible Alpha.

Shopify stock fell 10.4% on the news, coming to $79.88 on the stock market today. The company’s Q4 gross merchandise volume from merchant transactions increased 23% to $75.1 billion and merchant solutions revenue increased by 21% to $1.6 billion.

The company forecasts that revenue will grow at a low-twenties percentage rate on a year-over-year basis, translating to a mid-to-high-twenties year-over-year growth rate when adjusting for the 500 to 600 basis points impact from the sale of its logistics businesses in 2023. Analysts predict revenue will reach $8.38 billion, an increase of about 19%.

Since they sold their delivery and logistics business to Flexport in 2023, it has decreased Wall Street concerns over rising capital spending as the company partners with others to process digital payments and shipping and represents small businesses through the setup of e-commerce websites.

Shopify stock holds a Relative Strength Rating of 95 out of a best possible 99 according to IBD Stock Check-up

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