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“This post-COVID world is what we’re building for” explains Shopify and the stock jumped!

May 8th, 2020

Shopify Inc. (NYSE:SHOP) stock shot up after releasing impressive Q1 2020 results:

Revenue in Q1 2020 soared 47% to $470 million, way ahead of analysts estimates and of their own guidance.

The company posted a surprise profit: adjusted net income came in at $22.3 million, or $0.19 per share. Analysts were expecting an adjusted net loss of $0.18 per share.

Gross merchandise volume (GMV) jumped 46% to $17.4 billion, with gross payments volume (GPV) of $7.3 billion.

And here comes a fantastic number which underlines the value Shopify is creating for its merchants:

GMV through point-of-sale (POS) channels plunged 71% between March 13 and April 24 when physical stores were closed, but Shopify’s retail merchants were able to replace 94% of those sales on average with online sales!

This means an impressive immediate and accelerated shift away from brick-and-mortar toward online purchasing which certainly saved a lot of shops!

“This post-COVID world is what we’re building for and we have shifted accordingly.
Shopify’s world view has not changed. Our conviction that merchants need to be able to sell to their buyers wherever they may be remains as true today as it was a decade ago” explained COO Harley Finkelstein on the conference call!

Shopify continues to invest heavily in its Shopify Fulfillment Network, which was announced last summer and launched its „Shop app“ last week, an aggregated e-commerce marketplace that will compete more directly with Amazon.

Shopify’s balance sheet continues to be very strong. At the end of last quarter they had cash and cash equivalents of $2.36 billion and no meaningful debt.

Since the beginning of 2020 Shopify’s share price has risen 77%!
Is Shopify still a buy at today’s price?

Shopify’s stock is valued at an impressive price/sales ratio of 53 which means that a lot of the future is already priced in.
But on the other hand Shopify has an enormous potential to become the no.1 platform for independent online merchants.

Therefore it could be wise to wait until the stock price will possibly decline further following today’s anouncement of a secondary offering of 1’850’000 shares or when the general mood at the stock market turns negative!

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