The top e-commerce stocks on the TSX delivered hefty returns in recent years but fell out of favour. Today, the nightmare of Shopify (TSX:SHOP) and Lightspeed Commerce (TSX:LSPD) in the last two years is over.
At the current share prices, no one would believe that SHOP and LSPD posted gains of 184.71% and 149% in 2020. Moreover, these growth stocks traded as high as $213.98 and $159.93 once compared to $84.06 and $20.42 in November 2023.
Still, if you want exposure to e-commerce heading into 2024, either deserves serious consideration. The erstwhile tech darlings are back on investors’ radars.
Sustained growth and profitability for the future
On November 2, 2023, Shopify popped 21% to $82.08 after presenting its financial results for the third quarter (Q3) of 2023. The price jump broke the 20.02% one-day gain record registered on March 18, 2022. In the three months that ended September 30, 2023, revenue increased 25% to US$1.71 billion versus Q3 2022.
Notably, the net income of the $108.5 billion provider of essential internet infrastructure for commerce reached US$718 million on a 36% year-over-year increase in gross profit. The net loss a year ago was $159 million. On a year-to-date basis, net loss narrowed by 81% to US$718 million compared to the same quarter last year.
“Our third-quarter results demonstrate the progress we are making to further solidify Shopify’s position as the global leader in commerce,” said Harley Finkelstein, president of Shopify. He added that the company helps merchants succeed in any economic environment by delivering innovative product solutions.
Finkelstein believes Shopify is well-positioned for sustained growth and profitability for the future. For its chief financial officer, Jeff Hoffmeister, the financial performance in Q3 2023 is a testament to the resilience and adaptability of Shopify’s platform and its merchants. It was also a showcase of the durable business model.
Last, Finkelstein looks forward to the busiest shopping season of the year. He stated, “We’re confident that our unified commerce platform empowers our merchants with the tools they need to seize every opportunity and achieve greater success.” I wouldn’t be surprised if the tech giant posts a new one-day gain when it reports the Q4 and full-year 2024 results next.
Position of strength
Lightspeed Commerce, a $23.11 billion point-of-sale and e-commerce software provider, is in the limelight too this month. The share price climbed 15% to $19.85 in the post-earnings release. Market analysts are bullish, as evidenced by their 12-month average price target of $29.06 (+42%).
In Q2 fiscal 2024, consolidated revenues increased 25% to US$230.27 million, while net loss thinned 47% year over year to US$42.49 million. According to management, the quarterly results indicate strong progress on all of Lightspeed’s key objectives for this fiscal year.
Its chief executive officer, JP Chauvet, said, “We are now in a position of strength and will focus on growing our business, helping our customers, completing our vision and delivering value to our shareholders.” Expect Lightspeed to continue innovating its industry-leading platforms and bring the power of artificial intelligence.
Potential gains
Shopify and Lightspeed Commerce will gain for investors due to the most recent earnings reports and constructive business outlook. The e-commerce stocks might not match their meteoric rise before, but the potential gains would still be considerable.
