Shopify Stock Rises Upwards After Better Than Expected Earnings
This Thursday's trading session proved to be positive for Shopify as it gained 17%. The reason behind this huge gain was the better-than-expected earnings report of Shopify. Considering the difficult economic landscape with high inflation, strong USD, and high rates, it was nothing short of a surprise.
Furthermore, things are not going well for a lot of US tech companies, and despite all of this, Shopify has surprised the market. Overall, Shopify earned $1.37 billion during the 3rd quarter, which was better than the estimates of the market analysts. When compared with the last year, the earnings of Shopify increased by 22%.
However, the operating losses of Shopify increased to $345 million as compared to $4 million during the same period of time last year. So on that front, this is the 3rd quarter in a row in which the company has faced operating losses.
Similarly, Shopify's sales growth is also in decline, and the company continues to invest in the supply chain. Shopify has also acquired Deliverr, a logistic company which will help Shopify control more components of its supply chain.
According to Shopify's President, 2022 is the year of investment for the company. He also stated that Shopify, as a company, wants to be profitable, but he didn't state when the company will turn back to being profitable.
What Is Shopify?
Shopify is an online platform through which independent retailers and major brands can sell different products. But the fact which makes Shopify unique is that it is an e-commerce platform through which people can make their own stores and websites.
During COVID-19, the market capitalization of Shopify reached $212 billion as a lot of users turned towards online shopping. However, this optimism didn't continue into the years ahead as the Shopify stock has already lost 75% of its value so far.
Furthermore, the economic terrain in the USA and the rest of the world is getting more difficult. In such a situation, it doesn't make sense for Shopify to continue posting such outlier results. That's why we believe that more tough times are ahead of the company despite the better-than-expected quarterly earnings.