Is Shopify Stock A Good Investment – (SHOP)
Is Shopify a BUY?
Recently, Shopify sales have been performing significantly well. Over the past year, Shopify shares have increased by 41.1%, which is good when compared to the markets decrease of 1.25%.
It seems like Shopify stock is currently undervalued, which may signify that more investors should be adding SHOP stock to their portfolio.
Shopify Stock Prediction
Shopify performed well in Q2 2018, with adjusted earnings of 2 cents per share, this beats analysts estimates of a 2 cent loss. When compared to the same quarter in 2016, Shopify earnings per share have increased from a loss of one cent per share to two cents a share up.
Revenues are also up by 61.5% from Q2 2017 to the same quarter this year. The revenues reached $244.96 million this quarter, which outperformed Zacks estimate of $235 million. The guided range was $230-235 million, which the stock also outperformed.
Shopify’s increase in revenue can be attributed to a diversification in merchant base. The company has been proactive when introducing new applications for merchants to sell their products with. This means that merchants are selling more products and Shopify is increasing its revenue via fee.
2018 Q3, Shopify expected revenues to be around $253-257 million.
For the whole of 2018, Shopify has raised analyst estimates. Corporate management is now predicting revenues around $1.015 billion, which is up from the previous estimate of $1.01 billion. This increase in estimate is likely to entice investors to buy SHOP stock and increase the Shopify stock price marginally in the next few weeks.
Shopify Future Growth
Shopify has recently introduced Shopify Payments in Japan. The company now offers this payment solution in eight countries.
The reason behind this new solution is so merchants can sell on Shopify with ease. In upcoming months, we expect to see Shopify extend its language capabilities further than just English. By including more languages, Shopify will be able to cater for more merchants and boost engagement. This will be a driving factor pushing higher revenues. Overall increasing the Shopify stock price.
On the technology side, Shopify will be benefitting from its past investments in virtual reality (VR) and augmented reality (AR) in the future.
Not forgetting, Shopify has been developing a collection of apps to aid customer experience. This will cause the company’s costs to increase in the short-term but will likely increase revenue in the long-term.
Shopify has also partnered with Google to assist physical stores with payment security. The partnership sees physical stores using Google Wi-Fi routers across stores, integrated with Shopify’s dashboard. This allows businesses to manage sales and staff with little intervention needed.
For investors, it is important that Shopify diversifies its revenue streams on-line and off-line. This diversification in revenue channels makes Shopify a less-risky investment.
Is Shopify Stock A Good Investment?
Shopify stock price is looking promising over a long-term period. Last month we saw Shopify stock price hit an all-time high. Since then, Shopify stock price has dipped 17% and it is likely that the stock will rise again.
I give Shopify stock a “HOLD” rating currently. In the short-term, we may see improvements made by Shopify resulting in a change in rating to “BUY”.