The stock has fallen 81% from its highs due to slowing e-commerce growth as more shoppers returned to in-store browsing over the last year. Just as the spike in growth during 2020 was not normal, investors shouldn't assume that Shopify's current slower rate of growth is the new norm, either. As they say, the truth is somewhere in between.
That said, Shopify posted a 16% year-over-year revenue increase in the second quarter. While that pales in comparison to the growth experienced last year, it's still solid in the context of the supply chain problems and inflation that small merchants are wrestling with right now. Looking at the long-term trend, Shopify's recent growth represents a three-year compound annual growth rate of 53%.
Merchants are turning to Shopify to solve problems, and one of those needs right now is shipping items. To accomplish this, Shopify put the finishing touches on the Shopify Fulfillment Network with the recent acquisition of Deliverr. This leading expert knows which fulfillment center to direct merchandise to after it arrives at the port.
With all the solutions it's bringing merchants, Shopify's management believes they are building a business that can last 100 years, if not longer. The e-commerce market is expected to grow to $7 trillion by 2025, according to eMarketer, providing Shopify a lot of runway to deliver growth and returns to shareholders.
Why Shopify Stock Got Rocked on Tuesday
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- YvetteGunther·2022-09-24I think this is a buy at these levels as a starter?LikeReport
- XantheJuliana·2022-09-24This company will be doomed in the recession. The biggest sector to take a hit is the e-commerce.LikeReport
- YeddaJohnson·2022-09-24SHOP has a Quick Ratio of 11.17, indicating it is financially healthy.LikeReport
- ckmtan·2022-10-26Buy on dipLikeReport
- Jadenkho·2022-09-25👍🏻LikeReport