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Why Shopify Stock Popped Today

By Evan Niu, CFA – Apr 17, 2020 at 2:26PM

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The e-commerce platform is seeing a surge in traffic due to the coronavirus.

What happened

Shares of Shopify (SHOP 0.64%) have popped today, up by 7% as of 1:30 p.m. EDT, after Chief Technology Officer Jean-Michel Lemieux disclosed on social media that the e-commerce platform was seeing a massive surge in traffic. The COVID-19 pandemic is driving many consumers to place online orders due to ongoing containment efforts.

So what

Lemieux said that Shopify was seeing daily traffic levels comparable to Black Friday, the biggest shopping holiday of the year. The executive even suggested that there could be even more upside, while encouraging job seekers to apply for a position to help Shopify scale.

Shopify logo

Image source: Shopify.

When pressed, Lemieux declined to elaborate on how traffic levels may or may not correspond to gross merchandise volume (GMV). For reference, GMV had jumped 47% in the fourth quarter to $20.6 billion, bringing GMV for 2019 to $61 billion.

Now what

Larger e-commerce peer has similarly been seeing a surge in online orders as a result of the novel coronavirus outbreak. The company is also hiring more workers in order to meet that demand.

In response to the crisis, Shopify has been trying to help its merchants by offering more free trials, making gift cards available to all merchants on all plans, and facilitating in-store/curbside pickup and delivery for certain merchants. Like many other companies, Shopify suspended its 2020 guidance due to the ongoing uncertainty. Shopify reports first-quarter results on May 6.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Evan Niu, CFA owns shares of Amazon and Shopify. The Motley Fool owns shares of and recommends Amazon and Shopify and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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