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Indra Bhattacharjee's Avatar
published in Blogs
Feb 25, 2019

Shopify (SHOP, $187.77) clocks record Q4 growth

Shopify Inc, the virtual go-to destination for e-commerce entrepreneurs, has published impressive Q4 results that indicate a long runway of growth ahead. In Q4, revenue grew to $343.9 billion, a 54% y-o-y increase, and adjusted EPS rose to $0.26, a 73% y-o-y increase. Its gross merchandise volume (GMV) increased 54% to $14 billion. Overall, the company’s stock has appreciated over 800% in the last three years.

But do these figures tell the whole story.

Shopify is not just about pushing products; it’s about empowering merchants. The company helps merchants across the size spectrum to set up virtual shops quickly and affordably with the help of select tools that make it easier for clients to process payments, ship packages, secure financing, and reduce fraudulent transactions. This merchant solutions segment has alone accounted for a revenue growth of $210.3 million in Q4, a 63% increase over last year’s Q4.

Further, once the shops have been set up, the platform soon becomes indispensible for the merchants who don’t find it beneficial to leave it for another competitor. The listing and shipping of products, acceptance of payments, and the financing of future growth – the entire gamut of the shopping segments makes it impossible for the merchants to dump it altogether.

Other two important Shopify segments include Shopify Shipping, launched in 2015 that allows merchants to select from a variety of shipping partners to buy and print outbound and return shipping labels and track orders directly within the Shopify platform. Almost 40% of eligible merchants used the platform in Q4, up from 30% of U.S. and 20% of Canadian merchants in 2017's final quarter.

The next one is Shopify Payments, which enables merchants to accept card and digital payments across its online and offline commerce platforms. In Q4, $5.8 billion was processed on Shopify Payments, a 65% y-o-y increase, and about 41% of the company's GMV. 

All these beneficial factors coupled with its sticky ecosystem and features, is likely to help Shopify keep the merchants on its platform for years to come.

Related Ticker: SHOP

SHOP's Indicator enters downward trend

The Aroon Indicator for SHOP entered a downward trend on April 19, 2024. Tickeron's A.I.dvisor identified a pattern where the AroonDown red line was above 70 while the AroonUp green line was below 30 for three straight days. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options. A.I.dvisor looked at 187 similar instances where the Aroon Indicator formed such a pattern. In of the 187 cases the stock moved lower. This puts the odds of a downward move at .

Price Prediction Chart

Technical Analysis (Indicators)

Bearish Trend Analysis

The Momentum Indicator moved below the 0 level on April 03, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on SHOP as a result. In of 86 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .

The Moving Average Convergence Divergence Histogram (MACD) for SHOP turned negative on April 03, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 51 similar instances when the indicator turned negative. In of the 51 cases the stock turned lower in the days that followed. This puts the odds of success at .

SHOP moved below its 50-day moving average on March 22, 2024 date and that indicates a change from an upward trend to a downward trend.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where SHOP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

Bullish Trend Analysis

The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where SHOP's RSI Indicator exited the oversold zone, of 21 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .

The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 12 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SHOP advanced for three days, in of 335 cases, the price rose further within the following month. The odds of a continued upward trend are .

SHOP may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

Fundamental Analysis (Ratings)

Fear & Greed

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. SHOP’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 90, placing this stock slightly better than average.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (11.099) is normal, around the industry mean (29.871). P/E Ratio (781.900) is within average values for comparable stocks, (155.580). Projected Growth (PEG Ratio) (1.291) is also within normal values, averaging (2.725). Dividend Yield (0.000) settles around the average of (0.081) among similar stocks. P/S Ratio (14.347) is also within normal values, averaging (55.249).

Notable companies

The most notable companies in this group are Microsoft Corp (NASDAQ:MSFT), Oracle Corp (NYSE:ORCL), Salesforce (NYSE:CRM), Adobe (NASDAQ:ADBE), Intuit (NASDAQ:INTU), Uber Technologies (NYSE:UBER), SERVICENOW (NYSE:NOW), Shopify (NYSE:SHOP), Palo Alto Networks (NASDAQ:PANW), CrowdStrike Holdings (NASDAQ:CRWD).

Industry description

Packaged software comprises multiple software programs bundled together and sold as a group. For example, Microsoft Office includes multiple applications such as Excel, Word, and PowerPoint. In some cases, buying a bundled product is cheaper than purchasing each item individually[s20] . Microsoft Corporation, Oracle Corp. and Adobe are some major American packaged software makers.

Market Cap

The average market capitalization across the Packaged Software Industry is 10.07B. The market cap for tickers in the group ranges from 291 to 3.15T. MSFT holds the highest valuation in this group at 3.15T. The lowest valued company is BLGI at 291.

High and low price notable news

The average weekly price growth across all stocks in the Packaged Software Industry was -2%. For the same Industry, the average monthly price growth was -4%, and the average quarterly price growth was 13%. GRRR experienced the highest price growth at 742%, while YQAI experienced the biggest fall at -91%.

Volume

The average weekly volume growth across all stocks in the Packaged Software Industry was 1%. For the same stocks of the Industry, the average monthly volume growth was -36% and the average quarterly volume growth was 2%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 52
P/E Growth Rating: 75
Price Growth Rating: 61
SMR Rating: 84
Profit Risk Rating: 89
Seasonality Score: -12 (-100 ... +100)
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General Information

an operator of eCommerce website that allows customers to sell online by providing software to create an online store

Industry PackagedSoftware

Profile
Fundamentals
Details
Industry
Information Technology Services
Address
151 O'Connor Street
Phone
+1 613 241-2828
Employees
8300
Web
https://www.shopify.com
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