Yahoo Finance Shopify Inc.'s (NYSE:SHOP) Shift From Loss To Profit
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Shopify Inc.'s (NYSE:SHOP): Shopify Inc. provides a cloud-based multi-channel commerce platform for small and medium-sized businesses in the United States, the United Kingdom, Canada, Australia, and internationally. The company’s loss has recently broadened since it announced a -US$64.6m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$72.8m, moving it further away from breakeven. As path to profitability is the topic on SHOP’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for SHOP.
Check out our latest analysis for Shopify
SHOP is bordering on breakeven, according to the 26 IT analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$105m in 2021. SHOP is therefore projected to breakeven around 2 years from now. What rate will SHOP have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 64%, which is rather optimistic! If this rate turns out to be too aggressive, SHOP may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of SHOP’s upcoming projects, but, take into account that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing I’d like to point out is that SHOP has no debt on its balance sheet, which is quite unusual for a cash-burning loss-making, growth company, which typically has high debt relative to its equity. SHOP currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
This article is not intended to be a comprehensive analysis on SHOP, so if you are interested in understanding the company at a deeper level, take a look at SHOP’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:
Valuation: What is SHOP worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SHOP is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Shopify’s board and the CEO’s back ground.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
