Growth stocks are making a comeback on the TSX today, with many, especially in the tech sector, starting to climb back from the ashes. However, there haven’t been many performing as well as Shopify (TSX:SHOP).
Shopify stock is up about 95% in the last year alone, surging upwards as the company continues to make money-saving announcements. Yet shares are now down about 5% in the last week or so. This is why now might be an excellent time to consider picking up shares of this great growth stock.
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Why the fall?
Shares of Shopify stock fell as concerns of inflationary pressure pushed the markets lower in general. The Bank of Canada announced another rate hike, bringing Canada’s interest rate to 5% as of writing. This came despite inflation continuing to drop, with the Bank of Canada remaining firm on its tactic of reducing inflation through interest rate hikes.
Canadians are set to have a bit of a break in August, with the next rate hike set for fall. This is important to note in the case of Shopify stock. Why? Because the growth stock has earnings coming out on August 2. And based on last quarter’s earnings, it’s not one investors are going to want to miss.
What happened in Q1?
During the first quarterly earnings for Shopify stock, the company announced there would be major changes coming in. The biggest announcement was the sale of its business logistics company to Flexport for a 13% stake in the company. However, it also went through another round of layoffs.
All this sent shares even higher, with Shopify stock proving to investors it remains laser focused on reducing costs. On top of this, the company saw key metrics increase across the board.
Gross merchandise volume (GMV) was up 15% year over year to US$49.6 billion, with total revenue up 25% as well. Monthly recurring revenue (MRR) also increased 10% to US$116 million compared to 2022 levels. Shopify Plus contributed US$39 million to this amount or 34%, up from 30% as of last year.
Since the last earnings report, Shopify stock announced it would introduce an artificial intelligence (AI) assistant for merchants on the platform. This is likely to be discussed further in the company’s second-quarter report, especially when it concerns costs.
Buy now for the quarterly jump?
Shopify stock is going to need to prove to investors that these layoffs, cuts, sales, and more are all doing something positive for its bottom line. And that an investment in AI is going to be worth it as well. Shares have been inching upwards after the recent dip in share price, making it a good time to consider the stock ahead of earnings.
Shopify stock tends to increase after earnings reports, with the company demonstrating growth year over year again and again. Analysts project the company will outperform results once again, which is likely to create a surge in share price that investors could look forward to.
But, of course, no one has a crystal ball. Yet in this time of growth stocks, with many looking to get back the returns lost over the last few years, investors may be antsy to see Shopify stock shares rise once again.
