Shopify stock (NYSE: SHOP) gained about 10% over the past month and remains up by over 80% this year. This is well ahead of the Nasdaq-100, which remains up by 42%. There have been a couple of positive developments for the stock of late. For one, late last month, Shopify launched Amazon’s
AMZN
Buy With Prime option. The deal will allow Shopify vendors to offer delivery options that use Amazon’s fulfillment network on their storefront while checking out using their Amazon accounts. This removes a potential risk for Shopify, as Amazon has been looking to monetize merchants from third-party platforms by extending its services such as Prime fulfillment and Amazon Pay. While Shopify vendors could independently add this support previously, it is now officially endorsed by Shopify, potentially meaning that Shopify will get some commissions from transactions. Shopify also posted a better-than-expected set of Q2 results last month. Revenue grew by 31% year-over-year to $1.7 billion, with adjusted earnings coming in at $0.14 per share, compared to a loss in the year-ago quarter, driven by lower adjusted operating expenses. The company’s profitability could continue to look up following the divestment of its logistics business, with gross margins for Q3 projected to be about 2% to 3% above the 49.3% recorded in the second quarter due to the sale of the company’s logistics business.
Interestingly, Shopify has had a Sharpe Ratio of 0.9 since early 2017, ahead of the 0.6 for the S&P 500 Index over the same period. This compares with the Sharpe of 1.3 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.
Subscribe
Gain access to all our Premium contents.
More than 100+ articles.
Buy Article
Unlock this article and gain permanent access to read it.