Shopify reports third-quarter earnings early Thursday with analysts focusing on the e-commerce firm's core business amid recent divestitures. SHOP stock has gained 32% this year but has traded down since July.
Consensus estimates have moved up slightly ahead of the Shopify earnings report.
Shopify is expected to swing to a 15-cent profit on an adjusted basis from a 2-cent loss in the year-earlier period. Revenue will grow 22% to $1.67 billion, analysts estimate.
Another key financial metric for the e-commerce firm is gross merchandise volume related to transactions by merchant customers. GMV is expected to rise 17% to $54.27 billion.
"While results remain important to the story, our conversations with investors have generally centered around near-term GMV dynamics given the macro environment, student loan repayments, and the rise of Temu/Shein," said Deutsche Bank analyst Bhavan Shah in a report.
SHOP STOCK: Flexport Struggles
Consumer downloads of shopping apps Temu and Shein have taken off in 2023. Temu is a subsidiary of China's PDD Holdings.
On the stock market today, SHOP stock rose 0.6% to close at 47.19. Shopify stock hit a 52-week high of 71.53 on July 14. The company hosts an investor day on Dec. 5.
In early June, Canada-based Shopify completed the sale of its fulfillment unit to Flexport, easing investor angst over rising costs. Further, Flexport will be Shopify's logistics partner under a revenue-sharing arrangement.
But Flexport has been struggling of late. Flexport founder Ryan Petersen recently returned to the San Francisco-based company after the departure of former Amazon.com executive Dave Clark as chief executive.
On its Q3 earnings call with analysts, Shopify management may address the Flexport relationship.
Focus On Cost Cutting
Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping.
"We believe that the main challenges for SHOP revolve around the soft discretionary spend environment and their ability to achieve sustainable margin improvement," said Evercore ISI analyst Mark Mahaney in a report previewing Q3 results.
"We are encouraged by the revenue potential related to rising payments adoption and subscription price flexing, as well as the opportunity to enhance margins through cost-cutting measures," he added.
Heading into the Shopify earnings report, SHOP stock holds a Relative Strength Rating of 62 out of a best-possible 99.
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