Shopify: Strong Plus Migration Is A Bullish Signal

  • Shopify’s stock has dropped 20% in the past month due to slightly weak 2Q guidance, despite beating revenue and EPS expectations.
  • The recent selloff is overdone and presents an attractive entry point, as the company’s key growth drivers, including GMV, GPV, and MRR, remain on track.
  • Shopify’s resilient consumer spending, boosted by increased marketing investments, indicates potential for future growth.
  • The EV/Sales/g and PEG multiple have largely decreased, trading below the sector averages, reflecting its revenue and earnings growth potential in the future.
  • The Shopify Plus migration has been successful, enabling the company to secure a 3-year revenue stream and demonstrating strong customer engagement.

Investment Thesis

Shopify’s (NYSE:SHOP) has dropped 20% over the past month after a strong 1Q FY2024 earnings. This selloff was largely due to a weak forward guidance, even though revenue and EPS beat expectations in the last quarter. Unsurprisingly, the stock’s