Shopify (NYSE: Shopping) The stock is up 37% in 2024, according to data provided by . S&P Global Market Intelligence. While the market is growing, the market is increasingly excited about e-commerce platforms as they continue to report solid growth and improved profitability, and easing inflation could lead to increased consumer spending.
Shopify is the infrastructure that powers millions of ecommerce retailers. Its core clients are small and medium-sized businesses who sign up for a complete package that includes a website and e-commerce functionality, but it has expanded to offer a range of packages and single services that drive business from larger clients. .
It’s been a rocky road over the past few years, managing through accelerated pandemic accommodations, building too much to meet declining demand, and then shedding unnecessary infrastructure. Expanding to a more linear path has landed us in a good position, becoming profitable again.
Third quarter sales increased 26% year over year, exceeding expectations. operating profit It more than doubled to $283 million. We have expanded our free cash flow margin in each quarter this year, and management is guiding us toward similar performance in the fourth quarter.
Shopify is growing profitably, but its growth story isn’t over yet. It has identified several areas to focus on expansion, including International, its fourth-largest e-commerce sales platform. Global gross merchandise volume (GMV) increased more than 30% in the third quarter, compared to 23.6% companywide, and international merchants are gaining value by joining the platform.
Merchants who participated in the Managed Markets program, which offers a full international setup, sold to an average of 83 countries and saw an average increase in international sales of more than 40%. Shopify is also expanding its product assortment in international locations around the world.
It’s also embracing an omnichannel model and providing more complete solutions for retailers both online and offline, with offline GMV outperforming the company overall in the quarter as well.
The only downside here is the stock valuation. Shopify stock trading to get rich P/E ratio for the next one year of 54. If Shopify is set to grow in the coming years, investors can still expect its stock price to rise over time. Some of the growth will be embedded in this, but it will eventually surpass it and the stock will likely reward patient investors.
