On Friday, Piper Sandler maintained a Neutral stance on Shopify (NYSE:NYSE:SHOP), with a constant price target of $67.00. The firm's analysis of third-quarter Shop Pay trends revealed weaker than expected web traffic, indicating flat quarter-over-quarter gross payment volume (GPV) at an estimated $16 billion. This flat volume is a deviation from the over 50% average growth in Shop Pay GPV observed over the trailing twelve months, which had suggested potential for stronger growth.
The review of Shop Pay, a payment processing tool by Shopify, showed mid-30s year-over-year growth in checkouts, which was lower than the firm's initial projections. This outcome mirrors a similar pattern from the second to the third quarter of 2022, where volumes remained unchanged. Despite this, the analyst slightly adjusted the third-quarter and full-year estimates, hinting at a potential flat or declining merchant solutions take-rate for the quarter.
The findings come as a follow-up to a previous note that anticipated operating expense (OpEx) growth trends for the second half of the year. The combination of these observations has led to a cautious approach to Shopify's third-quarter earnings per share (EPS). The analysis is based on data showing a strong correlation between Shop Pay checkouts and GPV over the past three years.
Shopify, which provides a commerce platform for businesses, has seen its payment processing feature, Shop Pay, become a significant part of its offerings. The payment volume processed through Shop Pay is a critical metric for the company, as it directly impacts revenue from merchant solutions.
As the third quarter comes to a close, the market will be watching Shopify's performance closely, particularly in terms of its GPV and merchant solutions take-rate, which are key indicators of the company's financial health and growth trajectory.
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