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Shopify’s impressing 2019 results!

February 14th, 2020

Shopify’s (NYSE:SHOP) 2019 results were even better than already high expectations!

Revenue in the last quarter of 2019 came in at $ 505.2 million which means a growth rate of 47% accelerating from the 45% growth in Q3 2019.

The real big growth driver was the segment „merchant solutions“ (payment processing, transactions etc.) growing 53% yoy.

Gross merchandise volume, the volume of all merchandise sold over Shopify’s platform for 2019 reached $61.1 billion, an increase of 49% over 2018.

Operating loss on a GAAP basis for 2019 was $141.1 million, or 9% of revenue, versus $91.9 million, or 9% of revenue, for 2018. This reflects the cost of heavy investments into new offerings for their merchants, p.e. Shopify launched „Shopify Fulfillment Network“ a new logistics offering for their merchants.

By year end 2019, already 29% of Shopify’s merchants were based outside the core geographies of the US and Canada, compared with 24% in these largely non-English-speaking markets in 2018.

Shopify now starts to expand internationally which soon could mean another growth driver for the company.

The company announced that 2020 will be another year of heavy investments.

So don’t expect Shopify to be bottom line positive any time soon. But we believe these investments will pay off rather soon.

For 2020 the company expects revenues in the range of $2.130 billion to $2.160 billion an increase of 35% compared to the 2019 revenue of $1.578 billion

Consider this estimate „conservative“! Shopify will rather exceed that goal.

At yesterday’s closing price of $532.97 and a market capitalization of $ 61.75 billion Shopify is valued at a 2020 price/sales ratio of 29! This looks expensive but in our view is more than justified by future growth possibilities this company has.

Even after the tremendous runup we consider this stock a „buy“!

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