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Shopify stock pulls back despite strong financials

Published 2024-02-13, 07:59 a/m
© Reuters.  Shopify stock pulls back despite strong financials
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Proactive Investors - Shopify Inc (TSX:SH., NYSE:TSX:SHOP) stock traded lower in Tuesday’s early deals despite a strong trading performance at the end of 2023.

At $2.1 billion, Shopify reported a 24% increase in fourth quarter revenue – or 30% after adjusting for the sale of Shopify’s logistics business – whilst total merchandising across the firm’s platform similarly showed a 23% improvement up to $75.1 billion.

Gross profit was up 33% to $1.1 billion. Shopify reported an operating income margin of 13%, and a free cash flow margin of 21%, with free cash flow totalling $446 million, up from $90 million in the same period last year.

For the full year, total revenue amounted to $7.1 billion marking a 26% improvement from the prior year on gross payment volumes of $137 billion.

Shopify’s revenue comprised $5.2 billion from merchant services, up 27% and subscription services which increased 23% to contribute $1.8bn

The company, in its results statement, said it expects revenue growth in the first quarter ‘at a low-twenties’ percentage rate year-over-year.

In terms of investor relations narrative, the company highlighted a potential technology boost as it adapts its services and product suites to include AI. It recently launched ‘Shopify Magic’ which is described as an AI-enabled suite of features including a shopping assistant powered by OpenAI's ChatGPT API.

"2023 was an incredible year for both Shopify and our merchants,” Shopify president Harley Finkelstein said in a statement.

"As we look ahead to 2024, our focus remains on driving innovation in an ever-evolving commerce landscape, delivering products that will propel our merchants' businesses forward, with the support of our world-class talent and our valued merchants and partners."

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Jeff Hoffmeister, chief financial officer, meanwhile, added: “For 2024, we look to build on the momentum that we achieved in 2023 and continue to deliver a strong combination of both top-line growth and profitability."

In New York, Shopify stock was down 7.65% changing hands at $82.30 – prior to this morning’s fall, Shopify was up just over 20% for 2024 to date.

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