When Will Shopify Inc. (NYSE:SHOP) Breakeven? – Simply Wall SteCommerce
Shopify Inc.’s (NYSE:SHOP): Shopify Inc. provides a cloud-based multi-channel commerce platform for small and medium-sized businesses in the United States, the United Kingdom, Canada, Australia, and internationally. With the latest financial year loss of -US$64.6m and a trailing-twelve month of -US$77.5m, the US$43b market-cap amplifies its loss by moving further away from its breakeven target. The most pressing concern for investors is SHOP’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for SHOP, its year of breakeven and its implied growth rate.
Consensus from the 26 IT analysts is SHOP is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$379m in 2022. SHOP is therefore projected to breakeven around 3 years from now. In order to meet this breakeven date, I calculated the rate at which SHOP must grow year-on-year. It turns out an average annual growth rate of 49% is expected, which is rather optimistic! If this rate turns out to be too aggressive, SHOP may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of SHOP’s upcoming projects, but, take into account that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one aspect worth mentioning. SHOP currently has no debt on its balance sheet, which is rare for a loss-making loss-making, growth company, which usually has a high level of debt relative to its equity. This means that SHOP has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are too many aspects of SHOP to cover in one brief article, but the key fundamentals for the company can all be found in one place – SHOP’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should further research:
- Valuation: What is SHOP worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SHOP is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Shopify’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
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