Should you buy Shopify stock? (May 2024)

Published first at https://www.3minutebreakdowns.com Shopify stock analysis. Ticker: $SHOP Shopify stock is down 25% over the past week after the company reported first quarter earnings. At the latest price, the company is now worth 74.7 billion. Account for cash, investments and debt, and the enterprise value is just over 67 billion. Revenue over the last 12 months comes to 7.4 billion, net income is negative 200 million and free cash flow is positive 1 billion. So Shopify stock is now valued at 9 times revenue and 64 times free cash flow. On its face, Shopify’s Q1 earnings look fine. Revenue grew 23% which was above analyst estimates and guidance for high-teens growth next quarter is more than acceptable. Especially since that number includes a 3 or 4% hit from the sale of Shopify’s logistics business. Even so, the recent sell-off simply highlights the main concern about Shopify stock. Heading into earnings, Shopify was trading at over 10 times revenue and 20 times gross profit. That valuation is in line with some of the fastest growing and most expensive stocks on the market. But Shopify’s growth rates, although strong, are slowing down. Perhaps more importantly the company is seeing pressure on gross margins. Management said that gross margins would decline again next quarter by about 50 basis points. #stocks #investing #stockmarket #3mb