Shopify Q1 Earnings Outlook: Traders Eye Key Metrics as Rally Continues
May 3, 2023
Shopify, Inc. ($SHOP) is set to report corporate first-quarter earnings results on Thursday, May 04, before the market opens. The results will be followed by an earnings call at 8:30 am Eastern Time, according to a press release from Shopify.
After an early-year recovery in January following heavy losses in 2022, investors have been hesitant to bid the price higher, although a modest rally has taken shape recently. The US-listed stock price has been capped below $50 per share since earlier this year.
The likelihood of a recession in the United States and Canada has cooled investor sentiment, especially for consumer brands. Amazon, a comparable company to Shopify, also sold off heavily in 2022 and has so far failed to recover the bulk of those losses, following a similar trend to its northerly competitor.
Investors want to see the bump in sales growth from the fourth quarter, when revenue grew 26% from a year ago, to continue. Currently, Wall Street estimates range around 20%, which would be slightly lower than the prior quarter.
More importantly, however, is likely the revenue from merchant solutions. That metric rose 30% to $1.3 billion in Q4 from a year ago and helped reinvigorate the bullish thesis on the stock. The primary driver for merchant revenue has come primarily from an increase in gross merchandise volume (GMV) and gross payments volume (GPV). Investors should be able to quickly identify those numbers, as they have traditionally been listed at the top of the financial highlights press release.
Investors will also be keyed in on what executives see surrounding cost reduction strategies, including seller fees and company headcount. Gross profit margins slipped to 46% in the fourth quarter from 50% a year before. A recent fee increase may have helped bring that number up and, if so, would go a long way in keeping the bulls happy.
Shopify has carved out an upward channel since early March when prices hit a multi-month low. More recently, the 26-day Exponential Moving Average (EMA) has acted as support. With that in mind, a break below the channel’s lower bound or the 26-day EMA may spark a move lower, perhaps to the early March low at 39.02. Alternatively, an extension higher may target channel resistance.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.