What Happened:
Shares of e-Commerce software platform Shopify (NYSE:SHOP) jumped 12.9% in the after-market session after the company reported gross merchandise value, revenue, and operating profit that beat expectations pretty strongly this quarter. Revenue growth was strong and it will continue in the next quarter as the company guided Q2 to feature a similar growth rate vs. Q1 (in-line with Consensus expectations). Shopify announced that it is selling its logistics business to Flexport (expected to close in 2Q23), and Shopify will receive 13% equity interest in Flexport. The market is likely cheering this deal because it should improve the company's operating leverage and capex profile. Lastly, Shopify announced layoffs that will impact roughly 20% of its workforce. Overall, we think this was a really good quarter that should leave shareholders feeling very positive.
What is the market telling us:
Shopify's shares are very volatile and over the last year have had 70 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.
Shopify is up 64.7% since the beginning of the year. Investors who bought $1,000 worth of Shopify's shares 5 years ago would now be looking at an investment worth $4,320.
Is now the time to buy Shopify? Access our full analysis of the earnings results here, it's free.