Market Overview

Shopify Merchant Feedback Paints Bullish Picture For Q2, Roth Capital Says In Earnings Preview

Shopify Merchant Feedback Paints Bullish Picture For Q2, Roth Capital Says In Earnings Preview

Shopify Inc (NYSE: SHOP) is set to report second-quarter results July 31 that could should show a "healthy" merchant business, according to Roth Capital Partners. 

The Analyst

Analyst Darren Aftahi maintained a Buy rating on Shopify with a price target lifted from $165 to $192.

The Thesis

Roth Capital's firsthand checks and conversations with approximately 90 merchants who use Canada-based Shopify's platform bode well for the company's upcoming earnings report and warrant an incrementally bullish stance on the stock, Aftahi said in a Tuesday note. (See the analyst's track record here.)

The analyst shared the following takeaways from Roth Capital's conversations with Shopify merchants: 

  • Respondents who use Shopify's Merchant businesses saw a median growth rate of 48 percent year-over-year.
  • 79 percent use Shopify's payments platform, a flat number from one year ago.
  • 37 percent use Shopify's shipping solutions, up from 35 percent last quarter.
  • Twelve users said they're seeing a positive impact from integration with Instagram.
  • 30 merchants signed up for integration with, Inc. (NASDAQ: AMZN) and are bullish on those prospects.

Shopify is expected to report the following in its Q2 print, Aftahi said: 

  • Revenue growth of around 54 percent to $233.8 million.
  • Non-GAAP EPS of negative 4 cents.
  • Subscription solutions growth of 47 percent year-over-year.
  • Merchant solutions growth of 60 percent.
  • A gross margin decline of 100 basis points to 56.5 percent amid investments in the cloud and other initiatives.
  • Total operating expense growth in-line with historical levels at 59 percent.
  • A 50-percent increase in gross merchandise value to $8.8 billion.

Price Action

Shopify shares hit a new all-time high of $176.60 Tuesday morning and were trading down 1.45 percent to $170.75 at the time of publication. 

Related Links:

Citron Blasts Shopify, Says Changes To Facebook Data Will 'Annihilate' Company's Entrepreneurs

KeyBanc: Pullback In Shopify Shares Creates Buying Opportunity

Latest Ratings for SHOP

Oct 2019Initiates Coverage OnBuy
Sep 2019MaintainsOutperform
Aug 2019MaintainsBuy

View More Analyst Ratings for SHOP
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Posted-In: Citron Research Darren Aftahi e-commerceAnalyst Color Short Sellers Price Target Reiteration Analyst Ratings Best of Benzinga


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