Much to the chagrin of bulls holding Shopify (NASDAQ: SHOP) stock, the company’s 11% drop last week after the earnings report will not likely shake their confidence.
Shopify reported GMV growth of 56%, down from 64% last year Q2. Still, revenue grew 62 percent to $245 million. GMV is up, thanks to adoption by Shopify’s merchant base of all merchant solution offerings during the quarter. The merchants generated $3.6 billion in Shopify Payments, up 66% from last year.
Subscription solutions growth rose 49% ($35.3 million). Management attributes the revenue growth on investments made into the company two years ago. Shopify Plus and Shopify Capital are diversifying and growing the company’s revenue streams.
Shopify ended the quarter with $1.6 billion in cash. Cash flow from operations fell in the quarter, though. This is due to a pickup in growth of merchant cash advances. So, the drop in this key metric should not concern investors.
Takeaway
SHOP stock touched above $170 since June on two occasions, setting a "double top" on the charts. The technical drop that followed does not tell investors where the stock moves next. But the tailwind in the international merchant mix, continued growth in the business, and investor willingness to pay a premium suggests the drop in Shopify stock will not last.
