Piper Sandler reiterates Neutral rating on Shopify stock with adjusted Q3 and full-year estimates

EditorAhmed Abdulazez Abdulkadir
Published 11-10-2024, 06:58 pm
© Reuters

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.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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