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Why Shopify Stock Jumped 14.6% Today

By Joe Tenebruso - Mar 24, 2020 at 5:07PM

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Cash payments to Americans could drive increased e-commerce sales.

What happened

Shares of Shopify (SHOP -6.67%) leaped nearly 15% on Tuesday, coinciding with a stimulus-fueled market rally. 

So what 

With the COVID-19 coronavirus pandemic threatening to throw the U.S. economy into a deep recession, Congress is working to pass a massive stimulus deal. The markets surged on Tuesday as both Republican and Democrat lawmakers said that an agreement was close at hand.

Shopify, and many other growth stocks, rallied sharply on the news.

A stock chart that rises sharply.

Image source: Getty Images.

Now what

The stimulus measures will reportedly include sizable cash payments to Americans. Many people will use these to purchase much-needed supplies. And with so many people stuck at home, many of these purchases will be made on e-commerce websites that are powered by Shopify's platform.

Shopify earns a fee on the transactions processed via its payment services, as well as those that use its shipping services. The e-commerce leader is therefore likely to benefit once a stimulus deal is struck.

Additionally, with many businesses now closed and millions of employees out of work, more people are likely to try their hand at entrepreneurship in order to make a living. Shopify's main purpose is to make it easier for people to start online businesses, and it could see increased demand for its core website-building services in the weeks ahead.

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Stocks Mentioned

Shopify Inc. Stock Quote
Shopify Inc.
SHOP
$32.69 (-6.67%) $-2.34

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