Shopify Inc. (NYSE:SHOP) Is Expected To Breakeven
NYSE:SHOP) future prospects. Shopify Inc., a commerce company, provides a cloud-based multi-channel commerce platform for small and medium-sized businesses in Canada, the United States, the United Kingdom, Australia, and internationally. The US$125b market-cap company posted a loss in its most recent financial year of US$124.8m and a latest trailing-twelve-month loss of US$67.4m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Shopify will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.” data-reactid=”28″>With the business potentially at an important milestone, we thought we’d take a closer look at Shopify Inc.’s (NYSE:SHOP) future prospects. Shopify Inc., a commerce company, provides a cloud-based multi-channel commerce platform for small and medium-sized businesses in Canada, the United States, the United Kingdom, Australia, and internationally. The US$125b market-cap company posted a loss in its most recent financial year of US$124.8m and a latest trailing-twelve-month loss of US$67.4m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Shopify will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.
View our latest analysis for Shopify ” data-reactid=”29″> View our latest analysis for Shopify
According to the 29 industry analysts covering Shopify, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$30m in 2022. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 68% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We’re not going to go through company-specific developments for Shopify given that this is a high-level summary, but, keep in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Shopify 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
Next Steps:
Shopify’s company page on Simply Wall St. We’ve also compiled a list of essential aspects you should further research:” data-reactid=”50″>There are key fundamentals of Shopify which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Shopify, take a look at Shopify’s company page on Simply Wall St. We’ve also compiled a list of essential aspects you should further research:
- Valuation: What is Shopify 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 Shopify 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 background.
- 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.
Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”55″>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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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