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Why Shopify Stock Surged Today

By Joe Tenebruso – Updated Oct 28, 2021 at 4:24PM

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Investors breathed a sigh of relief following the e-commerce specialist's latest earnings report.

What happened

Shares of Shopify (SHOP 3.62%) climbed 8% on Thursday following the release of the e-commerce platform provider's third-quarter financial results. 

So what

Shopify's revenue jumped 46% year over year to $1.1 billion. The gains were driven by a 37% rise in the company's subscription solutions revenue, to $336.2 million, and a 51% surge in merchant solutions revenue, to $787.5 million.

Notably, Shopify's gross merchandise volume (GMV) -- essentially, the total dollar value of goods and services sold on its platform -- increased 35% to $41.8 billion, highlighting the magnitude of the company's growth in recent years. "It took 15 years for our merchants to get to $200 billion in cumulative GMV, and just 16 months to double that to $400 billion," Shopify President Harley Finkelstein said in a press release.

A rising bar chart.

Shopify continues to grow at an impressive clip. Image source: Getty Images.

With the economy reopening, Finkelstein noted that more transactions are taking place in physical retail locations, suggesting that Shopify is finding success beyond its core e-commerce business. "As the share of GMV from offline expanded within our total GMV, it is clear that entrepreneurs are embracing a future in which retail happens everywhere," Finkelstein said.

All told, Shopify's gross profit rose 50% to $608.9 million. However, the company's heavy investments in its fulfillment network and other growth initiatives weighed on its operating and net profits. As a result, Shopify's adjusted earnings per share fell 28% to $0.81.

Now what

Still, Shopify's results likely helped to reassure investors that its long-term expansion plans remain on track despite slowing growth for the overall e-commerce sector. "The economy remains resilient, consumer spending on services and off-line retail is expanding, and e-commerce, after easing from its peak share as a percent of total retail, is growing at a more normalized pace relative to 2020," the company said.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

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