Bull of the Day: Shopify (SHOP)

Shopify Company Overview

Ottawa, Canada-based Shopify Inc. (SHOP) is a leading global traditional commerce and e-commerce platform that helps businesses of any size to start, scale, market, and manage their business. The Zacks Rank #1 (Strong Buy) company is best-known for managing a platform and services engineered for simplicity and reliability, while delivering a better shopping experience for customers globally.

Merchants leverage Shopify’s comprehensive multi-channel commerce platform to run businesses across various sales channels, including web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces. The company offers an integrated back-end system that enables these merchants to effectively and efficiently manage products and inventory, process orders and payments, ship orders, build customer relationships, and leverage analytics.

Shopify’s Best-in-Class Products Drive Growth

Merchant-friendly tools, aggressive international expansion, and increased penetration in the payments segment are driving Shopify’s growth. Last quarter, merchant solutions revenues jumped 36.6% year-over-year. Additionally, ‘Shop Pay’ processed $27 billion in revenue in the second quarter (a 65% YoY increase) as the high-growth segment launched in 16 more countries. As a result, SHOP continues to be one of the most consistent double-digit growers on Wall Street.

Shopify Embraces AI, Lands E-commerce Deal with OpenAI

Though private, OpenAI is arguably the most important company on Earth currently. For instance, Advanced Micro Devices (AMD) recently surged 43% in a single session after securing a deal with the ‘ChatGPT’ parent company. Meanwhile, earlier this month, SHOP shares gained more than 6% as volume swelled to double the norm after signing an agreement with OpenAI.

In the terms of the deal, Shopify will integrate with ChatGPT to allow chatbot users to discover and purchase products directly within a ChatGPT conversation, essentially creating a new business. Shopify’s collaboration with the fastest-growing application essentially creates a new way to shop online, ensuring that Shopify continues to reach a vast audience. Additionally, the deal solidifies Shopify as a go-to provider across all commerce platforms. Unlike many software laggards, Shopify is not taking any chances with missing out on new e-commerce avenues. Recently, Shopify integrated with Ethereum, the second-largest cryptocurrency, to support yet another direct payment option. Wall Street analysts anticipate that Shopify will generate double-digit revenue for the foreseeable future.

Shopify Delivers Consistent Bullish EPS Surprises

Although Wall Street expectations have been high, Shopify has delivered in recent quarters for bulls. Over the past four quarters, SHOP has beaten Zacks Consensus Analyst Estimates by an average of 13.62%.

Bottom Line

With its continued innovation, strategic partnerships, and consistent earnings outperformance, Shopify remains at the forefront of the global e-commerce revolution. By integrating cutting-edge technologies like AI and blockchain while expanding its payment and merchant solutions, the company is positioning itself for sustained long-term growth.

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This article originally published on Zacks Investment Research (zacks.com).

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