Internet commerce platform provider Shopify (NYSE:SHOP)(TSE:SHOP) will release its Q4 financial results before the markets open on Tuesday, February 13, 2024. Higher gross merchandise volume (GMV) and increased pricing should support its top-line growth. Further, its efforts to reduce costs will cushion its bottom line.
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While Shopify will likely deliver year-over-year growth, its stock has appreciated over 86% in one year. This could limit the upside potential. With this backdrop, let’s delve into Q4 expectations.
SHOP – Q4 Expectations
Wall Street expects Shopify to post revenue of $2.08 billion in Q4, up more than 20% year-over-year. Higher GMV, increased penetration of Shopify Payments, growth in the number of merchants on its platform, and higher pricing will likely support its top line.
Meanwhile, growth in the higher-margin Subscription Solutions business and its cost-cutting efforts will likely cushion its bottom line. Analysts expect Shopify to post earnings of $0.3 per share in Q4, up from $0.07 in the prior-year quarter.
Analysts Weigh In
Barclays analyst Trevor Young expects strong customer trends and cost discipline to support Shopify’s Q4 financials. Young reiterated a Hold rating on SHOP stock on February 8.
Another analyst, Anthony Chukumba of Loop Capital, reiterated a Hold rating on SHOP stock on January 30. However, he raised Shopify’s price target to $82 from $75 per share.
Is Shopify Stock a Buy, Hold, or Sell?
Wall Street analysts are cautiously optimistic about Shopify stock ahead of the Q4 print. It has 12 Buy, 16 Hold, and three Sell recommendations for a Moderate Buy consensus rating.
However, given the recent appreciation in its value, analysts’ average price target of $80.16 implies 11.64% downside potential from current levels.
Insights from Options Trading Activity
It’s worth noting that options traders are pricing in a +/- 14% move in SHOP stock on earnings, lower than the previous quarter’s earnings-related move of 22.36%.
The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
Learn more about TipRanks’ Options tool here.
Bottom Line
Shopify’s Q4 earnings will likely benefit from higher GMV, increased payment penetration, and higher pricing in the Subscription Solutions business. Further, SHOP’s focus on lowering costs should cushion its bottom line. However, due to the recent rally in its share price, Wall Street analysts are cautiously optimistic about SHOP stock ahead of earnings.
