Shopify Expected To Show Robust Merchant Growth In 2Q23, Survey Indicates: Analyst

Roth MKM analyst Darren Aftahi reiterated a Buy rating on the shares of Shopify Inc SHOP and raised the price target from $68 to $73.

The analyst recently surveyed SHOP merchants throughout June and the early part of July for 2Q23 trends seen in their respective businesses.

Of the merchant businesses the analyst surveyed, the median growth respondents have seen in 2Q23 for their respective businesses was about 14.2% versus 10.4% seen in last survey during Q123.

Of the respondents surveyed about 90% used SHOP payments (up 100 basis points q/q), while 62% (flat q/q) used SHOP shipping solutions, said the analyst.

Also, about 95% (flat q/q) of respondents said they had a social commerce presence.

The analyst expects 2Q23 revenue/non-GAAP operating income of $1.6 billion/$57.8 million, falling in line with consensus expectations.

The analyst’s model suggests about 13.6% y/y GMV growth, slowing 90 basis points q/q but improving 260 basis points y/y, which the analyst anticipates to be driven by continued merchant growth on the Plus and International segments.

The analyst expects SHOP to grow sales by over 25% in 1H23, which places it at the high end of peers’ growth of 25%.

Price Action: SHOP shares are trading higher by 6.04% at $69.02 on the last check Thursday.