National Bank analyst Richard Tse continues to stay bullish on Canadian e-commerce phenom Shopify (Shopify Stock Quote, Chart, News TSX, NYSE:SHOP), which just released numbers for the Black Friday/Cyber Monday weekend.
In a flash update to clients on Monday, Tse said strength in the e-commerce space bodes well for SHOP going forward.
Ottawa-based Shopify said a record number of sales were made over the high-impact weekend, with over 25.5 million consumers having made a purchase from a Shopify merchant.
“From the start of Black Friday in New Zealand, through the end of Cyber Monday in California, our merchants across more than 175 countries sold $2.9+ billion, up from last year’s $1.8+ billion. These unprecedented sales demonstrate the power of borderless commerce and how independent businesses and direct-to-consumer brands around the world have become the heroes of Black Friday/Cyber Monday,” the company said.
Tse says the pace of growth in Shopify’s gross merchandise volume —said to be the total dollar value of orders processed on SHOP’s platform, net of refunds and inclusive of shipping and handling, duty and value-added taxes— has been notable, with the analyst projecting 45 per cent growth for Shopify’s fourth quarter and an overall growth rate of 48 per cent for 2019.
“Our analysis suggests SHOP’s GMV momentum is tracking ahead of our expectations. That said, we’d note that take-rate is also a variable that drives Merchant Sales – we’re looking for 1.52 per cent in Q4. In our view, the data from this past weekend (including the early data from Cyber Monday today) is a representation of the y/y pace for the quarter, and in this case, suggests SHOP is likely to come in ahead of its Q4 outlook for revenue (SHOP’s indicated range is $472 million to $482 million in Sales),” Tse writes.
“In light of that, we think investors want to own this stock going into Q4,” he said. Tse says his data continues to point towards strengthening trends in e-commerce, a bullish sentiment for Shopify, while the company’s success on the international front deserves notice, as well. Tse estimates that SHOP’s International Markets segment is growing at 49 per cent year-over-year.
With his update, the analyst is maintaining his “Outperform” rating and $400.00 target, which at press time represented a projected 12-month return of 22.2 per cent. (All figures in US dollars.)
Shopify hit the one-million merchants level a little over a month ago, which is up from about 600,000 merchants a year ago. as the company released its fiscal third quarter financials on October 29.
Shopify latest quarterly report came at the end of October where the company posted total revenue of $390.6 million, up 45 per cent year-over-year, with Subscription Solutions revenue up 37 per cent to $165.6 million and Merchant Solutions revenue up 50 per cent to $225.0 million. The company had a net loss for the quarter of $72.8 million or $0.64 per share compared to a net loss of $23.2 million or $0.22 per share a year earlier.