Advertisement
UK markets close in 39 minutes
  • FTSE 100

    7,965.43
    +33.45 (+0.42%)
     
  • FTSE 250

    19,897.38
    +86.72 (+0.44%)
     
  • AIM

    743.97
    +1.86 (+0.25%)
     
  • GBP/EUR

    1.1691
    +0.0022 (+0.19%)
     
  • GBP/USD

    1.2625
    -0.0013 (-0.10%)
     
  • Bitcoin GBP

    56,479.43
    +1,734.46 (+3.17%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.00
    +5.51 (+0.10%)
     
  • DOW

    39,776.21
    +16.13 (+0.04%)
     
  • CRUDE OIL

    82.60
    +1.25 (+1.54%)
     
  • GOLD FUTURES

    2,234.60
    +21.90 (+0.99%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,503.18
    +26.09 (+0.14%)
     
  • CAC 40

    8,213.80
    +8.99 (+0.11%)
     

Shopify Inc’s (NYSE:SHOP) Shift From Loss To Profit

Shopify Inc’s (NYSE:SHOP): Shopify Inc. provides a cloud-based multi-channel commerce platform for small and medium-sized businesses in Canada, the United States, the United Kingdom, Australia, and internationally. The company’s loss has recently broadened since it announced a -US$39.99m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$42.30m, moving it further away from breakeven. As path to profitability is the topic on SHOP’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for SHOP, its year of breakeven and its implied growth rate.

See our latest analysis for Shopify

SHOP is bordering on breakeven, according to Internet analysts. They expect the company to post a final loss in 2019, before turning a profit of US$141.79m in 2020. So, SHOP is predicted to breakeven approximately a few months from now. What rate will SHOP have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 58.54%, which signals high confidence from analysts. If this rate turns out to be too aggressive, SHOP may become profitable much later than analysts predict.

NYSE:SHOP Past Future Earnings June 26th 18
NYSE:SHOP Past Future Earnings June 26th 18

Given this is a high-level overview, I won’t go into details of SHOP’s upcoming projects, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

ADVERTISEMENT

One thing I’d like to point out is that SHOP has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. SHOP currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of SHOP to cover in one brief article, but the key fundamentals for the company can all be found in one place – SHOP’s company page on Simply Wall St. I’ve also put together a list of important factors you should further research:

  1. Valuation: What is SHOP worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SHOP is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Shopify’s board and the CEO’s back ground.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.


To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.