SHOP Stock Falls As Q4 Earnings, Revenue Top Estimates

Shopify stock tumbled Wednesday amid December-quarter earnings, revenue and gross merchandise volume that topped consensus estimates. Management said marketing investments for SHOP stock would rise in 2022 to spur merchant customer growth, with capital spending rising as well.

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The higher investments come as the coronavirus pandemic fades and e-commerce growth normalizes. Canada-based Shopify (SHOP) reported fourth-quarter earnings before the market open on Wednesday.

For the quarter ending Dec. 31, Shopify earnings came in at $1.36 cents per share on an adjusted basis, down 14% from the year-earlier period. Revenue rose 41% to $1.38 billion, said the company.

Analysts expected Shopify earnings of $1.30 a share on revenue of $1.34 billion. A year earlier, Shopify earned $1.58 per share on revenue of $978 million.

SHOP Stock: Tough Year-Over-Year Comparisons

Gross merchandise volume from merchant customers rose 31% to $54.1 billion vs. estimates of $53.03 billion.

Shopify stock tumbled 15.9% to near 748 in early trading on the stock market today.

“Our initial impression is that the absolute results were solid considering the tough comparisons, but they fell short of buyside expectations,” said Jefferies analyst Samad Samana in a report. He added that gross profit margin of 50.8% fell shy of the street’s 52.8% estimate.

Heading into the Shopify earnings report, the e-commerce stock had retreated 35% in 2022.

Shopify Stock: Management Provides General Revenue Outlook

In Q4, Shopify said merchant solutions revenue rose 47% to $1.03 billion. Subscription solutions revenue climbed 26% to $351.2 million. Analysts had projected merchant solutions revenue of $985 million and subscription solutions revenue of $357 million.

For full-year 2022, Shopify said it expects “Year-over-year revenue growth to be lower in the first quarter of 2022 and highest in the fourth quarter of 2022.” “We do not expect the COVID-triggered acceleration of ecommerce in the first half of 2021 from lockdowns and government stimulus to repeat in the first half of 2022,” the company said.

In addition, Shopify said it expects “Merchant Solutions revenue growth to be more than twice the rate of subscription solutions revenue growth year-over-year, as merchants make greater use of our offerings, and as we expand existing products into new geographies and roll out newer features like Shopify Markets.”

Shopify said it plans higher sales and marketing investments as well as $200 million in capital spending in 2022.

In addition, Shopify had nearly $7.8 billion in cash on its balance sheet at the end of 2021.

Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping. Also, the e-commerce firm has stepped up business lending.

Also, the company had a Relative Strength Rating of 13 out of a possible 99, according to IBD Stock Checkup.

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Follow Reinhardt Krause on Twitter @reinhardtk_tech   for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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