Shopify Stock (TSX:SHOP) Earnings: What to Watch

Shopify stock (TSX:SHOP)(NYSE:SHOP) will release earnings on Thursday, and Motley Fool investors should watch for signs of long-term growth.

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Shopify (TSX:SHOP)(NYSE:SHOP) will come out with its earnings report this Thursday, and Shopify stock has already started climbing in anticipation. So let’s take a look at what Motley Fool investors could expect from Shopify stock during its announcement on October 28.

What analysts estimate

First, let’s take a look at analyst estimates. And in the case of Shopify stock, it’s very important to take these with a grain of salt. If you’ve been watching the company for some time, it’s clear the company is very good at outpacing not just the market, but estimates as well.

Still, for the next quarter analysts believe Shopify stock will continue to defy expectations. Analysts see Shopify as reaching earnings per share at $2.75. This would be an increase of 45% from the last quarter, but just a 3% increase year over year.

Revenue, however, has been climbing at an impressive rate. During the last quarter, the company reported over $1 billion in revenue for the first time. The average consensus estimate this quarter is now $1.71 billion. That’s an improvement of 54% quarter over quarter!

What analysts are saying

However, it’s important to note that analysts expected the company to do better when it came to revenue, expecting more from the massive growth the company has seen. And not just in earnings, but in taking on more and more subscribers. Shopify stock has made quite the reputation for itself, and if it’s going to keep up it’s going to have to keep pushing boundaries.

Luckily, there are a few things in the company’s favour this quarter. Fewer lockdown restrictions actually mean more sales for the company that took on local businesses. It’s also growing its fulfillment centres, and its pay structures are more widely available. Analysts continue to believe it to be a “buy” or even “strong buy,” with only two of 43 analysts recommending it a “strong sell.”

Shares of Shopify stock are up 30% in the last year but have fallen in recent months, though only by about 5%. So that could mean it’s a good time to get in during a pullback before it starts climbing back to that $2,000 mark.

Foolish takeaway

When it comes to Shopify stock, you shouldn’t treat it at this point as “special.” We recommend at the Motley Fool long-term holds, and that’s why I still like Shopify stock. It was a huge winner in the last few years, but now it’s stabilized. And more stability means more safety. If you have the cash, the company should continue to be a solid investment for the next decade and beyond.

But if you’re looking for a tech stock to be part of your get-rich-quick scheme, Shopify isn’t the one for you. Shopify stock’s days as a multi-bagger are likely over. It was fun, but now it’s time for something a bit less volatile.

And that’s why Motley Fool investors should look at the earnings report very carefully for long-term goals of Shopify stock. It’s still growing, and that should always be the case. But how is it going to continue getting local businesses on board?

How will it convince business owners, from small- to enterprise-level, to choose it over the vast amount of companies now available? Is Shopify stock still the future, or becoming part of the e-commerce past?

That’s for earnings to decide.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify.

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