If you’re looking for growth stocks for this next year, you’ve likely already come across Shopify (TSX: SHOP). Shares of Shopify stock have already more than doubled in the last year. So, you might be asking yourself whether now is still worth it to invest in the tech stock.
In short, yes. So, let’s get into why.
Earnings continue to impress
Earnings for Shopify stock are already right around the corner for both the fourth quarter and full year. And if the past year has been any indicator, there is certainly more to come for Shopify stock based on past earnings reports.
The stock surged as the company continued to increase both revenue and earnings. Shopify stock went from a net loss of $2.8 billion to $525 million in the last year alone, all thanks to cutting costs and putting cash to work.
What’s more, the tech stock looks like it has more in store for 2024. That’s especially true if the economy continues to see a “soft landing” and lower interest rates. This would be the ideal scenario for Shopify stock, encouraging consumers to spend once more. And frankly, they already are.
Another record weekend
Black Friday weekend continued to prove the best time of the year for Shopify stock. Even though consumers believed they would be cutting back. Instead, the stock pushed past its annual record once more, achieving a record US$9.3 billion in sales from Black Friday to Cyber Monday. This was a whopping 24% increase over the year before.
It hit a peak at US$4.2 million per minute during the weekend, with a mixture of established brands and new shops both leading the way. And again, this weekend wasn’t included during the company’s most recent earnings report.
For that report, the company saw gross profit up 36% year over year, with revenue increasing 25% during that time as well. Free cash flow (FCF) also turned positive for the fourth consecutive quarter. And with the company committing to using that cash to continue as the best platform for e-commerce use, it looks like we should only expect more growth.
What now?
So, what’s next for Shopify stock? Focus. A focus back on creating profits that will be used to continue pushing the brand forward. To bring on more and more small- and medium-sized businesses and help them thrive to become the future’s enterprise-level companies.
For its 2023 outlook, investors remain positive. There will be a revenue growth headwind of about 400 to 500 basis points from the sale of its logistics businesses, with full-year revenue growing by a mid-20s percentage rate year over year.
So, while Shopify stock has grown 109% in the last year alone, there is more room to run — especially when inflation and interest rates come down. In fact, even if it doubled in share price in the next year (which certainly isn’t off the table), Shopify stock would still be below all-time highs. So, is Shopify stock a solid buy among growth stocks? At this rate, absolutely.
