Shopify posts second-quarter loss, but revenue grows

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Canadian e-commerce company Shopify, Inc. (NYSE: SHOP) reported mixed results for the second quarter of 2022. The adjusted loss was $0.03 per share, compared to earnings of $0.22 per share in the prior year and consensus EPS estimate of 0 $.02 per share.

The reported figure includes an unrealized net loss of $1 billion versus an unrealized net gain of $800 million in the second quarter of 2021.

Total revenue increased 16% year over year to $1.3 billion. Monthly recurring revenue (MRR) increased 13% to $107.2 million, driven by an increase in the number of merchants joining Shopify’s platform and an increase in the number of outlets using POS Pro.

Subscription solutions revenue jumped 10% to $366.4 million, and merchant solutions revenue totaled $928.6 million, up 18%. This increase is mainly due to an 11% increase in gross merchandise volume (GMV) to approximately $47 billion.

The Ontario-based company ended the quarter with cash, cash equivalents and marketable securities of $6.95 billion.

Shopify Chief Financial Officer Amy Shapero said, “As commerce through offline channels grew faster in the second quarter, where our exposure is lower but growing, we continued to see increased adoption of our solutions. , enabling our merchants to remain nimble in a challenging macro environment and highlighting the breadth and resilience of our business model.

Revenue outlook looks promising for the second half of 2022

For the second half of 2022, Shopify expects GMV to grow more than the broader retail market. More merchants will likely join Shopify in H2 compared to H1.

In addition, the Merchant Solutions segment’s year-over-year revenue growth is expected to outpace the Subscription Solutions segment’s revenue for the full year 2022. Merchant Solutions’ revenue increase will be driven by Shopify Fulfillment, Shop Pay, Shopify Markets, Shopify Capital, and Shopify Payments.

SHOP Stock has over 20% upside potential

Following the publication of the results, Samad Samana of Jefferies (NYSE: JEF) assigned a buy rating to the stock with a price target of $40 (32.3% upside potential).

Samana said, “Shopify has continued to solidify its position as a platform merchants can rely on.”

Meanwhile, Oppenheimer’s Kenneth Wong (NYSE:OPY) reiterated a buy rating on Shopify and lowered the price target to $45 from $50 (25.3% upside potential).

Wong said, “Shopify’s platform is uniquely positioned to capitalize on the continued shift of consumer spending to personalized, nuanced online channels.

Overall, the stock has a moderate buy consensus rating based on 12 buys, 15 holds and two sells. SHOP’s average price target of $43.38 implies 20.8% upside potential.

Insiders and Hedge Funds Buy SHOP Stock

TipRanks’ Hedge Fund Trading Activity Tool shows that confidence in SHOP is currently positive, as the cumulative change in holdings across the 36 hedge funds that were active in the last quarter was a 1.3 increase. million shares.

Additionally, TipRanks’ insider trading activity tool shows that the insider confidence signal is currently negative for Shopify, even though company insiders have bought SHOP shares worth 7, $1 million in the last three months.

Shop stock is in demand

SHOP stock closed nearly 2% higher on Thursday and was trading up 1.1% in Friday’s pre-market session, at the time of writing. This bullish trend could be driven by the purchase of 1.77 million shares of the company by ARK Investment Management LLC from Catherine Wood.

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