As the holiday shopping season approaches, Shopify’s stock has soared to its highest level since early 2022, driven by robust third-quarter earnings and a promising outlook for the final quarter of the year.
The e-commerce giant, which provides businesses worldwide with online selling tools and services, saw its stock surge 23% following a revenue and earnings report that surpassed Wall Street’s expectations.
In the latest quarter, Shopify’s revenue jumped by 26% to $2.16 billion, exceeding analysts’ estimates of $2.11 billion. Gross merchandise volume (GMV), the total sales volume transacted through the Shopify platform, rose 24% year-over-year to reach $69.7 billion, well above the expected $68.1 billion. This marks the sixth consecutive quarter of Shopify reporting over 25% revenue growth, showing strong momentum in a competitive e-commerce landscape.
Adjusted earnings per share were reported at 35 cents, beating market expectations of 27 cents, and net income doubled to $344 million, further underscoring the company’s financial resilience. Shopify’s stock shot up by more than 21% on November 12, reflecting investor confidence in the company’s sustained growth and holiday season potential.
A significant driver of Shopify’s recent success has been its strategic integration of artificial intelligence into its platform. New AI-powered features like Shopify Flow, an automated inventory management tool, and Shopify Inbox, a chatbot for customer service, have improved operational efficiency for merchants and attracted new users. During the company’s earnings call, Shopify executives also teased further AI developments that are in the pipeline, although specific details remain undisclosed.
In addition to AI, Shopify has expanded partnerships with major players such as YouTube, TikTok, PayPal, and Google, helping merchants reach broader audiences across digital platforms.
“Shopify is increasingly the go-to platform of choice, not just for entrepreneurship, but for all of commerce,” said Shopify President Harley Finkelstein.
Finkelstein highlighted the company’s growing appeal to large brands, including Reebok, Lionsgate Entertainment, and luxury fashion label Off-White.
Looking ahead to the holiday quarter, Shopify projects continued growth with revenue expected to rise by a mid-to-high-twenties percentage compared to the previous year. This optimistic forecast outpaces Wall Street’s expectations and positions the company for strong performance during one of the most critical shopping seasons of the year.
According to Shopify CFO Jeff Hoffmeister, the favorable fourth-quarter outlook is driven by solid merchant activity and assumptions about sustained GMV growth. Analysts are anticipating Shopify’s December-quarter revenue to reach $2.63 billion, representing a year-over-year increase of approximately 23%.
Shopify’s recent decision to divest its logistics business to Flexport has helped streamline its operations, allaying investor concerns over capital spending. This restructuring move allows Shopify to focus on its core software offerings, which provide end-to-end solutions for online businesses, from website creation to digital payments and shipping partnerships.
Adding to its momentum, Shopify appointed Mikhail Parakhin, formerly at Microsoft, as its new Chief Technology Officer in August, signaling a renewed emphasis on technological innovation and platform development.
Shopify’s stock currently boasts a strong Relative Strength Rating of 82 out of 99, with an Earnings Per Share (EPS) Rating of 98, indicating robust performance relative to peers. As Shopify gains traction in the e-commerce space, it competes not only with other software providers like Salesforce and BigCommerce but also with retail behemoths Amazon and Walmart. Despite the competitive pressures, Shopify’s stock has surged by approximately 41% this year, outpacing the Nasdaq’s 36% gain over the same period.
With input from the Street, CNBC, and Investor’s Business Daily.
