Shopify (NYSE: SHOP), like other e-commerce companies, benefited during the pandemic as people stayed indoors and brick-and-mortar shops were shuttered. In its last quarterly report (Q3 2021), the company's revenue (including monthly recurring revenue), Gross Merchandise Volume (GMV), gross profit, and net income were all up significantly year-over-year (YoY).
Now, as restrictions continue to ease and more people venture outdoors, investors are worried that Shopify's growth will be stifled. Additionally, with the Federal Reserve expected to start raising interest rates next month to curb inflation, Shopify will need to pay more for debt to grow its business. Another strike against the company is that it is really overvalued. Since releasing its last quarterly, Shopify's stock is down nearly 40% so investors will be listening intently when the company releases earnings next week.
Shopify reports earnings for the fourth quarter of 2021 on Wednesday, February 16th, at 8:30 am Eastern Time.
To listen to the call and to access the transcript, as well as the shareholder's letter and the financial statements for the quarter, all you need to do is go to Shopify's Investor Relations Page.
Wall Street analysts tracking Shopify are expecting the company to post earnings of $0.53 on revenue of $1.7 billion. This would represent a 49% drop and a 79% increase, YoY. For this quarter, Shopify expects to be impacted by supply chain delays and increased costs for materials, labor, and shipping. Additionally, the company anticipates a rise in operating expenses as it hires more engineers and commercial talent.
However, it also expects the quarter, which covers the holiday shopping season, to contribute the largest portion of the entire year's revenue. As the number one e-commerce platform in the U.S., Shopify has over 3.5 million active websites that are responsible for billions of dollars in sales.
Shopify has a strong moat that attracts merchants away from the restrictive practices of rival Amazon, and continues to grow its offerings to its customers. In fact, last year it released Shopify Markets to help ease cross-border payments and Shopify Balance in 2020 for money and rewards management. Furthermore, the company's products integrate with social media giant TikTok and music streaming market leader Spotify to expose its customers to additional commercial avenues.
Surprisingly enough, the one-stop e-commerce solution company is currently only available in English-speaking regions. That means it still has a huge unrealized market in a field that is projected to be worth nearly $7.4 trillion by 2025. Investors will be keen to hear about the company's expansion plans.
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