Shopify Inc. (TSX: SHOP)(NYSE:SHOP) stock rose 3.9% on May 8. Shares of Shopify have climbed 23.8% month-over-month as the company has faced down yet another short campaign in March. The stock surged to an all-time high of $202.45 in late March before being targeted by short-seller Andrew Left.
Left argued in his newsletter Citron Research that Shopify would suffer from the fallout of the Facebook, Inc. (NASDAQ:FB) data scandal. Facebook has vowed to revise its privacy guidelines, and Left projected that this could damage the access to channels that Shopify is granted. Left took aim at Shopify in October 2017 in a short-selling campaign that drove the stock below $120. The stock did not recover until January 2018. Is it reasonable to expect Shopify to bounce back to all-time highs in the spring and summer?
Shopify released its first-quarter results on May 1. Total revenue jumped 68% year-over-year to $214.3 million and subscription solutions revenue increased 61% to $100.2 million. The company has continued to report impressive growth in its monthly recurring revenue as it draws new merchants to its platform. Merchant solutions revenue climbed 74% to $114.1 million as gross merchandise volume surged year over year to $8 billion.
The company reported a net loss of $15.9 million, or $0.16 per share compared to a net loss of $13.6 million, or $0.15 per share in the prior year. As of March 31, 2018, Shopify reported $1.58 billion in cash, cash equivalents, and marketable securities as it received a significant boost from its offering of Class A subordinate voting shares in Q1.
Shopify expanded shopping on the Facebook-owned Instagram platform to the United Kingdom, Canada, Australia, Brazil, Germany, and 38 additional countries. In the month of March, one third of its merchants used Shopify Shipping, which allows merchants to purchase shipping labels in Shopify admin or the Shopify app. Mobile device purchases from merchants’ stores accounted for 75% of traffic and 64% of orders in the first quarter.
For the full year, Shopify clarified its guidance of revenue between $1 billion and $1.01 billion.
On May 8, Shopify announced that it would open a brick-and-mortar location, which may come as a surprise as the company has established itself as a juggernaut in the e-commerce business. The location will open later in 2018 to attract more users to the platform. Shopify hosted a press conference with Prime Minister Justin Trudeau on the same day, and demonstrated some of its virtual and augmented reality technology. The company is also an enticing target with some of its artificial intelligence development.
Shopify has reiterated that it will not release a merchant count until the end of the fiscal year. Retail sales in Canada were weaker than expected during the holiday shopping season, and bounced back in February on the strength of auto sales. However, e-commerce growth remains strong as consumers are consistently migrating to online platforms.
Even with the March and early April dip, Shopify stock has climbed 45.9% in 2018 thus far. The broad growth of e-commerce makes it hard to bet against the momentum at Shopify going forward.
