SHOP stock rises as Crypto.com expands payment services: Buy alert?

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SHOP stock rises as Crypto.com expands payment services: Buy alert?

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SHOP stock rises as Crypto.com expands payment services: Buy alert?
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Highlights

  • Shopify Inc (TSX: SHOP) is trending hot on the stock markets amid a crypto-related report.
  • Cryptocurrency platform Crypto.com has announced that it is extending its payment service Crypto.com Pay to Shopify merchants.
  • Shopify registered a year-over-year (YoY) rise of 22 per cent in its top line to US$ 1.2 billion in Q1 2022.

Shopify Inc (TSX: SHOP) is trending hot on the stock markets amid a crypto-related report. Cryptocurrency platform Crypto.com has announced that it is extending its payment service Crypto.com Pay to Shopify merchants, where customers can make purchases using cryptocurrencies.

Crypto.com said that Shopify merchants who install this digital payment platform will not have to pay the 0.5 per cent settlement fee on transactions for a month after integrating. The offer, however, will be extended till June end, the firm said.

In April, digital payments platform Strike announced its integration with the Canadian e-commerce giant, which is said to have enabled eligible US merchants of Shopify to accept payments in Bitcoin as US dollars.

Presently, crypto platforms like Strike, Coinbase Commerce and BitPay are available under the Shopify website’s additional payment method category.

Now, let us take a look at Shopify’s financial and stock performances.

Shopify Inc (TSX: SHOP) Q1 FY2022 results

Shopify registered a year-over-year (YoY) rise of 22 per cent in its top line to US$ 1.2 billion in Q1 2022. The company pointed out that this revenue growth signifies a compounded annual growth rate (CAGR) of 60 per cent over the last two years.

The e-commerce enabler saw its monthly recurring revenue (MRR) spike by 17 per cent YoY to US$ 89.9 million at the end of Q1 2022. The large-cap company said that its subscription revenue jumped by eight per cent YoY to US$ 344.8 million in the latest quarter as its merchant network expanded.

Despite this, Shopify saw an operating loss of US$ 98 million and a net loss of US$ 1.5 billion in the first three months of FY2022. The e-commerce company had cash and cash equivalents (CCE) and marketable securities of US$ 7.25 billion on the balance sheet at the end of Q1 2022.

Shopify’s Q1 2022 results

What does Shopify’s stock performance say?

After closing at C$ 501.67 on May 19, SHOP stock was trading at C$ 498.87 per share at 9:55 AM EST on Friday, May 20. SHOP stock had declined by over 65 per cent in 12 months.

Shopify mainly sources finance from equity, as indicated by its debt-to-equity (D/E) ratio of 0.12. The e-commerce stock is highly overvalued in the market as its price-to-earnings ratio was 261.1.

The Relative Strength Index (RSI) tells how investors are reacting to the stock, which surged to 43.27 for Shopify on May 20, according to Refinitiv findings.

Also read: Is Telus (T) stock a buy as Globalive pushes bid for Freedom mobile?

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks. 

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