Why Is Wall Street So Bullish on Shopify (SHOP)? There's 1 Key Reason.

During the five-year period leading up to its all-time high in November 2021, shares of Shopify (NASDAQ: SHOP) 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.

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.

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.

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