7. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders as of Q4: 64
Ark Invest’s Equity Stake: $479.02 Million
Shopify Inc. (NYSE:SHOP) delivered stronger-than-expected revenue for the fourth quarter, though it fell short on earnings. The popular e-commerce platform reported adjusted earnings per share of $0.39, missing analysts’ expectations of $0.43. However, revenue exceeded forecasts, reaching $2.81 billion compared to the anticipated $2.73 billion. This marked a significant 31% increase from the $2.14 billion reported in the same quarter of the previous year, reflecting Shopify’s continued growth and strong merchant activity.
Despite the earnings miss, Shopify Inc. (NYSE:SHOP) remains optimistic about its trajectory. The company noted that the strong merchant momentum seen in Q4 is expected to carry into the first quarter, though it acknowledged that Q1 is traditionally its lowest quarter in terms of gross merchandise volume. This outlook signals confidence in Shopify’s ability to sustain growth, driven by its expanding ecosystem and increasing adoption of its commerce solutions.
Shopify Inc. (NYSE:SHOP)’s earnings report comes amid ongoing adjustments in the e-commerce industry following former President Donald Trump’s recent tariffs on the nation’s top three trading partners and his decision to close the long-standing de minimis trade loophole, commonly used by Chinese online retailers. The abrupt change disrupted customs processes and U.S. Postal Service operations, prompting Trump to sign an executive order temporarily reinstating the rule. On an investor call, Shopify President Harley Finkelstein emphasized the importance of the de minimis exception for small businesses, stating that it helps lower shipping costs and enables them to compete on a larger scale. He also advocated for broader reforms to the rule to ensure continued support for global commerce.
RiverPark Large Growth Fund stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q4 2024 investor letter:
“Shopify Inc. (NYSE:SHOP): Shopify was a top contributor in the fourth quarter following a strong 3Q earnings report that included better than expected revenue growth and continued margin expansion. GMV growth of 24% was three percentage points above investor estimates, revenue of $2.2 billion was $40 million better and free cash flow of $421 million was $80 million better. A combination of new merchants to the company’s platform, increased adoption of SHOP’s offerings by existing merchants, and e-commerce market share gains are driving this revenue growth and profitability.
In 2023, 10% of US retail e-commerce sales flowed through SHOP, second only to Amazon, and the company is still enjoying significant tailwinds as retail merchants of all sizes adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services, such as its digital wallet Shop Pay, should continue to drive revenue growth of more than 20% per year over the next several years, accompanied by re-acceleration of operating margin growth and FCF generation.”
