Shopify keeps Outperform rating with National Bank

It was a better than expected Black Friday and Cyber Monday weekend for Canadian e-commerce juggernaut Shopify (Shopify Stock Quote, Charts, News, Analysts, Financials NYSE:SHOP), according to National Bank Financial analyst Richard Tse, who reviewed the numbers in a Tuesday update to clients. Tse said the positive results indicate a company with still a long growth runway ahead.

Shopify released its sales numbers for Black Friday Cyber Monday (BFCM) on Tuesday, showing a 19 per cent year-over-year increase in revenue to $7.5 billion. The company said more than 52 million consumers around the globe have made purchases during this year’s BFCM from companies using SHOP’s platform, an 18 per cent increase.

Shopify said top product categories over the weekend were apparel & accessories, health & beauty and home & garden, with 73 per cent of sales made on mobile devices versus 27 per cent on desktops.

“We saw record level shopping happening across all channels this weekend, proving businesses that meet their customers where they are, whether that’s online or in-person, will earn their loyalty in return,” said President Harley Finkelstein in a press release.

Shopify shares have tumbled a long way over the past year, but Tse sees upside over the coming 12 months, reiterating with his update an “Outperform” rating on the stock and $60.00 target price, which at the time of publication represented a projected one-year return of 57.8 per cent.

Tse said Shopify hit record sales this past weekend despite the challenging year-over-year comparison numbers and a return to in-person shopping. He noted other companies posting gains, including Salesforce, whose GMV on Black Friday was also up about three per cent from a year earlier, and in-store retail tech company Sensormatic Solutions, which estimated its Black Friday in-store traffic was up 2.9 per cent year-over-year.

By NBF’s own number-crunching, Tse said Shopify’s market share of global Black Friday online sales increased by about 5.2 per cent, compared to last year’s increase of 4.6 per cent, while the average cart price on Shopify’s platform was $105.10, up 3.9 per cent from a year earlier. 

Moreover, Tse said point-of-sale sales made by SHOP merchants were up 27 per cent, which underscores Shopify’s ability to provide a complete ecosystem experience for customers even as brick-and-mortar returns. 

“Bottom line, despite tough year-over-year comps and challenging macro backdrop, BFCM volumes on Shopify suggests continued share gains for Shopify, underscoring the resilience of its platform and perhaps more importantly, the ability to drive growth as the Company spins up new services across an increasingly growing base of merchants and Gross Merchant Volume,” Tse wrote.