A loud buy now?


Shopify The stock (TSX: SHOP) (NYSE: SHOP) recently experienced a massive rally, despite the weakness in the stock market as a whole. Between June 3 and June 21, 2021, the Shopify share gained almost 26%, despite a slight drop in the TSX Composite Index.

I’m going to take a closer look at the Shopify stock to help you understand the reasons for its recent rally and why it might be worth adding to your portfolio right now.

Recent update with Shopify’s payment service

On June 15, Shopify management made a crucial announcement regarding their payment service called Shop Pay. Shopify’s Shopify payment will be available on popular social media platforms Facebook and Instagram later in the summer. It will also be available on Google later this year. Shop Pay will be available to all merchants operating on these platforms, regardless of the ecommerce platforms they use.

Shopify management has claimed that the Shopify checkout process is 70% faster than the average checkout process on its own ecommerce platform, offering merchants a substantial upgrade.

Positive outlook for business growth

Shopify had a stellar year in 2020 as it reported a substantial increase in sales and revenue growth due to growing demand for its ecommerce services. Closures fueled by COVID-19 have forced many small and medium-sized businesses to switch to an e-commerce business model. The result has been that Shopify has dramatically increased its customer base.

The sudden surge in demand boosted Shopify’s revenue by 86% and increased its earnings per share from US $ 0.30 in 2019 to US $ 3.98 in 2020. Analysts expect earnings from the company are growing with the help of an increase of almost 51% in its sales this year.

While the company may not maintain a similar rate of profit growth as the pandemic abates, it will continue to enjoy a strong rate of profit growth. You can expect Shopify to continue to deliver significant financial growth in the years to come.

Stupid takeaways

Shopify’s first quarter earnings for fiscal 2021 were up 958% from the same period last year, reflecting earnings per share of US $ 2.01. The company’s quarterly earnings per share were more than double expected analysts’ estimates of US $ 0.75 per share. The company’s total revenue for the quarter increased 110% compared to the same period last year.

There are critical voices who still feel prone to a drop in Shopify’s sales growth rate over the next few quarters. However, Shopify has always exceeded analysts’ expectations and may continue this trend. Most of the businesses that have joined the company’s e-commerce platform due to the pandemic could continue to work with Shopify even after a return to relative normalcy.

The features and benefits that Shopify offers could continue to keep its platform in high demand among merchants and businesses of all kinds. Despite the sudden surge in Shopify’s stock price, I think it could present a substantial long-term increase. I would advise you to create a position in the company if you haven’t already.

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This article represents the opinion of the author, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We are straight! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer, so we post sometimes articles that may not conform to recommendations, rankings or other content. .

Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of its CEO, Mark Zuckerberg, is a member of the board of directors of The Motley Fool. Foolish contributor Adam othman has no position in any of the stocks mentioned. The Motley Fool owns stocks and recommends Facebook and Shopify. The Motley Fool recommends the following options: $ 1,140 long calls in January 2023 on Shopify and $ 1,160 short calls in January 2023 on Shopify.

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