How can financial traders be enthused about Shopify (NYSE:SHOP) when inflation is high and the company lost money during 2022’s third quarter? They’re in a positive mood because Shopify’s results were better than Wall Street had anticipated. Moreover, SHOP stock is heading higher as Shopify augments its array of tools for sellers as well as payment options.
It might be difficult for the skeptics to imaging Shopify succeeding during a time of elevated inflation. Yet, success is a relative concept. If Shopify can print better financial figures than the experts anticipate, then “good enough” might just be good enough.
This seems to be the case when it comes to Shopify’s third-quarter 2022 results. Analysts expected the company to post an adjusted loss of 7 cents per share, but Shopify actually only lost 2 cents per share. That’s also an improvement over its loss of 8 cents per share in the year-earlier quarter.
Moreover, Shopify’s revenue increased from $1.12 billion in the year-earlier quarter to $1.37 billion in Q3 2022. This exceeded the analyst consensus estimate of $1.34 billion.
What’s Happening with SHOP Stock?
Evidently, today’s traders are in a “shop ’til you drop” mood when it comes to SHOP stock. They pushed the shares up 11% soon after the trading session started, and even higher than that within the first hour.
Along with the Street-beating results, investors probably liked what Shopify President Harley Finkelstein had to say about his company’s proactive efforts during the third quarter. Finkelstein emphasized, “We’re preparing our merchants for what’s ahead.”
According to a report, Finkelstein added that the tools Shopify provides, from payments to fulfillment, could help the merchants gear up for the upcoming holiday shopping season. Finkelstein, furthermore, anticipates this time to be the busiest shopping season of the year.
It certainly appears that providing these tools has been a win-win for the merchants and the company itself. Indeed, Shopify’s Q3 2022 merchant solutions revenue grew 26% on a year-over-year basis.
All in all, it looks like Shopify overcame the inflation headwind to deliver expectation-beating quarterly results. It will be interesting to see whether the upcoming holiday season prompts significantly more buying and selling on Shopify’s platform. If so, then SHOP stock could continue on its upward trajectory.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
