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Shopify Stock Price Notches $400 Mark; More Upside is Ahead

Shopify Stock Price

Shopify (NYSE: SHOP) stock price is among the top performers in fiscal 2019 on the back of its aggressive growth plans. The stock price crossed $400 mark at the beginning of fiscal 2020; the market analysts are expecting further accelerating in share price momentum. This is because of its strong future fundamentals and substantial revenue growth potential.

SHOP shares grew 211% in the last twelve months. Shopify stock price could hit $450 in the coming days in the analyst’s view. In addition, chatters of M&A are adding to investor’s sentiments. CNBC’s Jim Cramer claims that two big companies with a market capitalization of over $70 billion are seeking to buy Shopify.

SHOP Shopify Inc. daily Stock Chart

Revenue Growth is The Biggest Catalyst

The company had generated revenue of $390 million in the latest quarter, up 45% from the year-ago period. Its subscription solutions revenue jumped 37% year over year to $165.6 million. In addition, Merchant Solutions’ revenue rose 50% year over year to $225.0 million, thanks to growth in Gross Merchandise Volume.

Moreover, the company also experienced growth in gross margins. This clearly indicates that the company has been investing in high margin areas. SHOP plans to accelerate its investments in international markets to boost its revenue growth. On the negative side, its expansion strategy is impacting the earnings potential.

Amy Shapero, Shopify’s CFO said, “By carefully balancing these multiple opportunities that have different investment time horizons, we can keep investing in the innovations that will power merchants in the future while helping them grow rapidly today.”

Shopify Stock Price Is Likely to Hit $450 Mark

The market analysts are showing confidence in the future fundamentals of the software company. For instance, Oppenheimer believes that Shopify’s new POS system and the AR/VR technology is likely to enhance end-market monetization trends, which is a positive catalyst for future growth trends.

The company is well set to generate record financial results for the final quarter of 2019. Consequently, the analysts are expecting the SHOP share price to sustain the upside momentum.

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Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.