What Happened:
Shares of e-commerce software platform Shopify (NYSE:SHOP) jumped 24.9% in the morning session after the company reported second quarter earnings results with revenue, gross merchandise value, free cash flow, and EPS exceeding Wall Street's expectations. Moving on, the company guided sales growth to be in the low to mid-20s percentage range for the next quarter, which is in line with analysts' estimates. Overall, it was a strong quarter for the company.
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What is the market telling us:
Shopify's shares are very volatile and over the last year have had 15 moves greater than 5%. But moves this big are very rare even for Shopify and that is indicating to us that this news had a significant impact on the market's perception of the business.
The previous big move we wrote about was 22 days ago, when the company gained 8.4% on the news that Bank of America analyst Brad Sills upgraded the stock's rating from Neutral to Buy and raised its price target from $78 to $82.
Shopify is down 11.3% since the beginning of the year, and at $65.44 per share it is trading 27.9% below its 52-week high of $90.72 from February 2024. Investors who bought $1,000 worth of Shopify's shares 5 years ago would now be looking at an investment worth $1,918.
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