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Stock Market Today: Shopify and Aurora Cannabis Are Growing Like Weeds

By Jim Crumly – Updated Apr 10, 2019 at 3:21PM

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Optimism over a trade deal with China fueled a powerful rally.

Stocks surged Tuesday on news of an agreement to avert a government shutdown and building optimism that the U.S. and China will reach a settlement on trade. The Dow Jones Industrial Average (^DJI 0.41%) and the S&P 500 (^GSPC 0.56%) both added over 1%.

Today's stock market

Index Percentage Change Point Change
Dow 1.49% 372.65
S&P 500 1.29% 34.93

Data source: Yahoo! Finance.

Materials and consumer stocks led the way; iShares US Basic Materials ETF (IYM 0.70%) rose 2.2% and the Consumer Discretionary Select SPDR ETF (XLY -0.32%) gained 1.5%.

Shopify (SHOP -1.77%) and Aurora Cannabis (ACB -0.20%), two companies riding powerful growth trends, reported much-anticipated earnings.

Rising stock graph.

Image source: Getty Images.

Strong e-commerce volume propels Shopify

E-commerce platform specialist Shopify reported fourth-quarter results that beat expectations, and shares rose 1.4%. Revenue increased 54% to $343.9 million, beating the analyst consensus of $328 million. Adjusted earnings per share soared 73% to $0.26, exceeding the $0.20 investors were expecting.

Gross merchandise volume (GMV), the value of orders processed by merchants using Shopify's platform, grew 54% to $14 billion. Subscription services revenue, which is driven by recurring revenue from an increasing number of merchants using the platform, jumped 42% to $133.6 million. Merchant solutions revenue, which is fueled by merchandise volume, increased 63% to $210.3 million.

Check out the latest Shopify earnings call transcript.

Looking forward, Shopify forecast full-year revenue of between $1.46 billion and $1.48 billion, which may have disappointed analysts, who were expecting $1.48 billion.

Shopify continues to ride the wave of online merchandise sales, and management commented on the conference call that the company had made a push with Canadian cannabis sellers in order to be positioned as the global leader in that space.

Aurora Cannabis is scaling rapidly

Marijuana producer Aurora Cannabis reported fiscal second-quarter results that showed that the company is growing sales rapidly while facing issues turning them into profits, and shares finished the session unchanged. Gross revenue, which excludes Canadian excise taxes, came in at 54.2 million Canadian dollars, up 83% from the previous quarter and 363% from the year-ago period. The company lost CA$237.8 million, but that included a CA$190 million mark-to-market adjustment for its investments.

Aurora scaled up its production capacity in the quarter, but saw prices fall and costs rise. The company produced 7,822 kilograms of marijuana, up 57% from the previous quarter, and said it is now operating at an annualized production rate of 120,000 kilograms. Average net selling price of dried cannabis fell 26% to CA$6.23 due to the introduction of excise taxes and lower wholesale pricing in the consumer market. The cost to produce a gram increased from $1.45 to $1.92 in the quarter.

Investors took the news in stride. Other marijuana stocks jumped today in anticipation of a hearing tomorrow on a bill to ease banking restrictions on pot companies.

Jim Crumly owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.

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