Shopify (NYSE: SHOP) stock has more than doubled in two months making the online shopping platform one of the biggest gainers of the coronavirus pandemic. This sentiment has been bolstered further by a surprise adjusted profit for the first quarter along with news that shows gross merchandise volume grew sharply in April compared to the first quarter.
“We are seeing US Black Friday-type of traffic as the company has added thousands of businesses to its platform amid social distancing policies,” said chief technology officer Jean-Michel Lemieux said.
The shares of Canada based e-commerce company rose more than 100% from March lows to the highest level of $740 last week before retreating to $708, on the announcement of class A subordinate voting shares priced at $700 per share.
The company expects to generate $1.295bn in gross proceeds from the offering to strengthen its balance sheet and support investment.
Its first-quarter revenue grew 47% year over year to $470m – beating analysts’ expectations by $27m amid 46% gross merchandise volume growth to $17.4bn, with expectations of more acceleration in the second quarter as the number of new shoppers rose 8% in April from the March quarter.
“While the COVID-19 pandemic has subdued commerce globally and especially strained small and medium-sized businesses, it has accelerated the shift of purchase habits to e-commerce,” Shopify said in an earnings release last week.
Along with strong growth in revenues, its first-quarter adjusted gross profit jumped 44% to $263.8m, and adjusted net income came in at $22.3m compared to $7.1m in the year-ago period.
Robert W. Baird analyst Colin Sebastian said he was confident about the strong product and engineering capabilities of the Ottawa-based e-commerce platform, but the analyst believes Shopify stock trading momentum will now depend on the sustainability of the recent sales growth.