SHOP Stock Earnings Summary - Should you buy the dip?

SHOP Earnings: $SHOP – Shopify Inc. has been consistently dropping over the last 6 months or so. Over the past 6 months, the SHOP stock has fell by more than 68%, with no apparent end in sight. This downtrend looks to be only continuing as they released their Q1 2022 earnings earlier this morning (May 5th 2022). This earnings report has sent the SHOP stock down an additional 13% in pre-market trading. SHOP Earnings Report: Total revenues grew by 22% to $1.2B (from Q1 2021 levels). However, despite their high earnings growth, SHOP missed their revenue estimate of $1.25B by 4%. Shopify reported an operating loss of $98M in Q1 2022, which is very far off Q1 2021 operating income of $119M. This is a very bad sign for Shopify moving forward and was most likely one of the bigger factors contributing to their 13% decline this morning. Shopify reported a net loss of $1.5B ($11.70 per share) in Q1 2022, which again falls very short of their Q1 2021 net gain of $254M ($2.01 per share). Shopify reported an Adjusted EPS of $0.20/share which fell 70% short of estimates (which were $0.63/share). In Q1 2022, Shopify announced that they would be undergoing a 10:1 stock split. This announcement was expected to re-gain interest in the SHOP stock, however, this had virtually no effect on their stock. In their earnings report, Shopify announced that they would be acquiring Deliverr. Shopify noted that this purchase would help them to simplify and scale order fulfillment, which would give their merchants a competitive advantage. Delivery offers inventory: receiving, inspection, placement algorithms, as well as preparation, storage, freight, and fulfillment optimization services. Deliverr has been able to offer 2-day delivery (and 1-day in some cases) across most online stores. This paired with Shopify’s “6 River Systems” warehousing technologies, should help them to compete with Amazon’s quick package delivery times, which has not been rivaled by many others. 80% of the $2.1B acquisition will be in cash ($1.68B), and the other 20% ($420M) will be granted via Class A common shares. This stock consideration represents 1,028,806 shares (1% of current shares outstanding). Overall Thoughts: I think that a large decline in the SHOP stock price is justified due to their operating loss of $98M, and the fact that they missed both their revenue estimate (by 4%), and their EPS estimate (by 70%). Furthermore, the fact that both their stock split, and news of an acquisition were unable to boost share prices, I think that we may see SHOP continue to fall over the coming weeks/months.

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SHOP Stock Earnings Summary - Should you buy the dip?

bearish

general Analysis

[2 min Read]

SHOP Earnings:

$SHOP - Shopify Inc. has been consistently dropping over the last 6 months or so. Over the past 6 months, the SHOP stock has fell by more than 68%, with no apparent end in sight. This downtrend looks to be only continuing as they released their Q1 2022 earnings earlier this morning (May 5th 2022). This earnings report has sent the SHOP stock down an additional 13% in pre-market trading.

SHOP Earnings Report:

  • Total revenues grew by 22% to $1.2B (from Q1 2021 levels). However, despite their high earnings growth, SHOP missed their revenue estimate of $1.25B by 4%.
  • Shopify reported an operating loss of $98M in Q1 2022, which is very far off Q1 2021 operating income of $119M. This is a very bad sign for Shopify moving forward and was most likely one of the bigger factors contributing to their 13% decline this morning.
  • Shopify reported a net loss of $1.5B ($11.70 per share) in Q1 2022, which again falls very short of their Q1 2021 net gain of $254M ($2.01 per share).
  • Shopify reported an Adjusted EPS of $0.20/share which fell 70% short of estimates (which were $0.63/share).
  • In Q1 2022, Shopify announced that they would be undergoing a 10:1 stock split. This announcement was expected to re-gain interest in the SHOP stock, however, this had virtually no effect on their stock.
  • In their earnings report, Shopify announced that they would be acquiring Deliverr. Shopify noted that this purchase would help them to simplify and scale order fulfillment, which would give their merchants a competitive advantage.
    • Delivery offers inventory: receiving, inspection, placement algorithms, as well as preparation, storage, freight, and fulfillment optimization services.
    • Deliverr has been able to offer 2-day delivery (and 1-day in some cases) across most online stores. This paired with Shopify's “6 River Systems” warehousing technologies, should help them to compete with Amazon's quick package delivery times, which has not been rivaled by many others.
    • 80% of the $2.1B acquisition will be in cash ($1.68B), and the other 20% ($420M) will be granted via Class A common shares. This stock consideration represents 1,028,806 shares (1% of current shares outstanding).

Overall Thoughts:

I think that a large decline in the SHOP stock price is justified due to their operating loss of $98M, and the fact that they missed both their revenue estimate (by 4%), and their EPS estimate (by 70%). Furthermore, the fact that both their stock split, and news of an acquisition were unable to boost share prices, I think that we may see SHOP continue to fall over the coming weeks/months.

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SHOP

Shopify Inc.

31.32

-0.09
-0.29%

Return

-
Position Return %
0.00
Position Return
400.93
Price When Posted

Metrics

360.84
Target Price
8/ 10
Confidence
2-4 Weeks
Timeframe
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Earnings Release
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News
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SEC
Filing
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