After a significant decline in 2022, this stock has surged 456% over the past three years.
During the five-year period leading up to its all-time high in November 2021, shares of Shopify (SHOP -7.85%) had surged 3,740% higher. The business was lifted by the pandemic as online shopping saw huge demand. This e-commerce stock might’ve diverged from reality, though.
Shares tanked in 2022, but now they’re back on the upswing. In the past three years, the stock has rocketed 456% higher (as of Oct. 10). Why is Wall Street so bullish on Shopify? There might be one reason.
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Shopify is still registering fantastic growth
Investors are extremely optimistic thanks to durable growth that has accelerated. After the pandemic boom, Shopify’s revenue increased by more than 20% in 2022, 2023, and 2024. And sales growth of 31% in the second quarter (ended June 30) was faster than the pace in the first quarter.
Gross merchandise volume continues to march higher, totaling $88 billion last quarter. This is a clear sign that the business has a very bright future as it further penetrates the e-commerce market on a global level.
Investors must be pleased with the bottom line
Shopify’s impressive top-line growth has now resulted in profits. Operating income totaled $291 million in Q2. Not too long ago, this was a money-losing enterprise. It’s become more financially sound.
Investors shouldn’t rush to buy shares just yet. Shopify is a great company, but the stock prices in very lofty expectations.
Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.