Shopify Inc (TSX:SH., NYSE:SHOP) shares traded higher ahead of today’s after-hours release of fourth-quarter results.
Earnings expectations aren’t super-high for Shopify’s fourth quarter, and, potentially, the high points of the announcement may already be known and priced in.
The SME-focussed e-commerce group already flagged a strong Black Friday and Cyber Monday trading, back in November, as it said merchants on the platform set a new record of US$7.5bn of sales. It was a 19% increase in sales for the shopping holiday compared to 2021.
READ: Shopify stock jumps on record $3.36B in Black Friday sales
A rudimentary and cursory analysis of broader discretionary spending trends since November bodes somewhat less well, yet speculative reports analysing web-traffic trends meanwhile suggest demand may have held up.
Analyst consensus ahead of the quarterly results expects a 1 cent per share earnings loss for the three months ended 31 December, on US$1.64bn of revenue.
Shopify shares rose by US$3.20 or 6.38% to trade at US$53.30 ahead of today’s results.
Deutsche Bank analysts last month upgraded Shopify to ‘buy’, lifting its target price to US$50 from US$40, on the premise that more independent businesses are projected to switch to the Shopify platform in 2023.
"Our conversations with industry constituents, including various Shopify agencies and partners, suggest enterprise adoption of Shopify Plus should accelerate in 2023, which should enable Shopify to once again outpace overall US e-commerce growth," DB analyst Bhavin Shah said in a note.
“Many leading brands are now actively looking to migrate or are in the process of migrating over from legacy/competing solutions and we note this is in sharp contrast to our conversations over the last 12 months which consistently highlighted the pace of migrations slowing."