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Q3 Earnings Preview for Shopify (NYSE:SHOP)

in EARNINGS/INVESTING IDEAS by

Shopify Inc. (NYSE:SHOP) is scheduled to report Q3 earnings results before markets open for trading on October 29, 2020.

The company is expected to report earnings of $0.49/share on revenue of $652.6 million. The consensus earnings per share (EPS) of $0.49/share is based on a poll of 29 analysts and represents a growth in eps of 268.7% over the same quarter last year, when the company reported earnings of -$0.29/share.

The revenue forecast of $652.6 million based on a poll of 28 analysts implies a year-over-year (YoY) growth in revenue of 67.1%. Last year the company reported $390.6 million in revenue for the quarter.

Expected to report EPS of $0.49/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $652.59 $390.55 67.1%
EPS $0.49 -$0.29 268.7%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Shopify Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.02 $1.05 4,110.1% Beat
Q1, 2020 -$0.17 $0.19 210.6% Beat
Q4, 2019 $0.24 $0.43 81.0% Beat
Q3, 2019 $0.10 -$0.29 −380.3% Missed
Q2, 2019 $0.04 $0.14 230.3% Beat
Q1, 2019 -$0.04 $0.09 300.7% Beat
Q4, 2018 $0.20 $0.26 27.0% Beat
Q3, 2018 -$0.03 $0.04 227.2% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 6.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 29, 2020 $985 $1,049 6.5% Increase
May 6, 2020 $686.11 $722.76 5.3% Increase
February 12, 2020 $492.75 $532.97 8.2% Increase
October 29, 2019 $324.93 $319.12 −1.8% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −0.90, the model suggests that the company is likely an earnings manipulator. A value of −0.90 implies a 18.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Shopify Inc. is currently trading at $1,038/share, up 1.2% for the day. The company is trading at approximately 90.5% of its 52-week high of $1,147/share. The company’s stock price is down −1.0% since the last earnings report and down −1.7% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 53.98 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:SHOP Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −1,875.86 and a forward P/E multiple of 391.33.

Shopify Inc.’s current share price also implies a price-to-book (P/B) multiple of 27.33. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $1,038
P/E Ratio −1,875.9x
P/E Ratio (Fwd) 391.3x
Price To Sales 60.8x
Total Debt / Total Capital 0.1%
Levered Free Cash Flow $51.797 million
EV / EBITDA −3,031.0x

Finbox

Shopify Inc. is a large-cap stock with a market capitalization of $126.5 billion and a total enterprise value of $122.7 billion. The company operates in the Information Technology sector and the IT Services industry.

Shopify Inc., a commerce company, 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. Its platform provides merchants with a single view of business and customers in various sales channels, including Web and mobile storefronts, physical retail locations, social media storefronts, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, build customer relationships, source products, leverage analytics and reporting, and access financing. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was founded in 2004 and is headquartered in Ottawa, Canada.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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