The cloud-based e-commerce platform Shopify (NYSE:STORE) never ceases to amaze. In just 16 months during the pandemic, its merchant’s total gross merchandise volume (GMV) for SHOP stock has doubled from $ 200 billion to $ 400 billion.
It is the platform of choice for small businesses moving to an online model, which has helped boost their growth.
With the pandemic weakening, Shopify and SHOP’s inventory will now expand on a more sustainable growth path.
Naturally, with its incredible financial performance over the past year, the SHOP share has generated impressive returns.
The one-year returns of the stock are above 50%, comfortably eclipsing those of the S&P 500. Its rise in value has slowed down lately, but it still performs remarkably well relative to the market.
Although it trades at a high valuation, its price metrics are consistent or more attractive than its peers. Therefore, with such an incredible performance over the past year, and more upside down, the SHOP stock is a strong buy.
The retail market is resetting
Shopify has developed its third quarter sales 46% to $ 1.1 billion. Its merchant and subscription solutions gained 51% and 37% from one year to the next respectively during the quarter. In addition, his GMV also rose to nearly $ 42 billion, which represents an increase of 35% compared to last year.
However, its GMV is below analysts’ expectations of $ 43.4 billion and has slowed significantly from the 114% increase in the first quarter.
The market appears to be resetting after the one-time effect of the pandemic on the online retail market. Last year Shopify generated $ 2.93 billion in revenue, which represents an increase of 86% compared to the previous year.
It also posted an annual operating profit of $ 90 million, a first in its illustrious history.
The company has handled supply chain disruptions and recent iOS updates extremely well. Its third quarter results show that its growth buffer is intact and that it has several catalysts that can lead to the next stage of expansion.
Broaden one’s horizons
Shopify has always followed the latest trends in the market. In the third quarter, he announced the launch of a new centralized platform called Shopify Markets to facilitate cross-border access for traders.
It is similar to what Amazon (NASDAQ:AMZN) has done with its platform, which facilitates international shipping wherever possible.
Furthermore, in the conduct of social commerce sales, the company recently extended its TIC Tac Partnership. Users can now organically discover products as well as purchase tabs related to a merchant’s store. Development conquered the market as the SHOP share jumped 7% on the day of release.
While Shopify management has not provided any specific guidance for the coming quarter, the platform is expected to continue to grow in a standardized fashion.
Nonetheless, there are huge opportunities ahead that will accelerate the expansion of its sales and results.
Although management has not commented on its performance in the fourth quarter, it will likely be the best quarter of the year. As a result, its operating income forecast for the full year should surpass the record of $ 437 million recorded last year.
Final result on the store’s stock
Shopify has had a phenomenal run over the past year, but seems to be slowing down as we move closer to a post-pandemic reality.
However, this should not deter investing in the SHOP share, which will continue to perform exceptionally well for the foreseeable future.
It invests in new areas that can drive the next era of business growth. Therefore, stock SHOP remains a top choice in the field of e-commerce.
At the time of publication, Muslim Farooque had (directly or indirectly) no position on the titles mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com publishing guidelines.
Muslim Farooque is a passionate investor and an optimist at heart. A long-time player and passionate about technology, he has a particular affinity for analyzing technology stocks. Muslim holds a Bachelor of Science in Applied Accounting from Oxford Brookes University.