Shopify Stock Soars Pre-Market After Strong Q3 Earnings: Retail Chatter Shows Optimism

Shopify Inc’s ($SHOP) shares were trading nearly 20% higher in Tuesday’s pre-market session after the Canadian e-commerce giant reported upbeat third-quarter earnings.

Revenue rose 26% year-over-year (YoY) to $2.16 billion, better than a Wall Street estimate of $2.11 billion. Net income rose 15% YoY to $828 million.

The company’s gross merchandise value (GMV) rose 24% YoY to $69.72 billion, higher than an estimated $68.12 billion. Free cash flow rose over 52% YoY to $421 million during the quarter while free cash flow margin improved to 19% from 16% a year earlier.

CFO Jeff Hoffmeister said Shopify achieved 26% revenue growth and 19% free cash flow margin, marking its sixth consecutive quarter of greater than 25% revenue growth excluding logistics.

“Moreover, we have grown free cash flow margin sequentially each quarter this year, consistent with what we delivered last year,” he said.

For the fourth quarter, the company expects revenues to grow at a mid-to-high-twenties percentage rate on a year-over-year basis and gross profit dollars to grow at a rate similar to the third quarter.

Shopify expects stock-based compensation to be $120 million for the quarter while free cash flow margin is estimated to be similar to the fourth quarter of last year.

Following the earnings release, most followers of the ticker on Stocktwits expressed a positive take on the stock.

One user expects the stock to hit the $110 mark soon.

Another praised the firm’s earnings report.

Shares of the firm have gained over 21% since the beginning of the year.

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