Quick Read
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Shopify (SHOP) surged 35% in a month on Q2 revenue growth of 34% and five straight quarters of GMV growth above 30%.
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MercadoLibre (MELI) gained just 5% and QQQ dipped over the same period, confirming Shopify’s rally is entirely company-specific.
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At a trailing P/E of 170x with loan losses nearly doubling to $141 million, the stock leaves little room for a guidance miss.
One e-commerce platform has pulled sharply away from its peers, and the size of that lead has turned a strong rally into a harder decision for shareholders. Shares of Shopify (NASDAQ:SHOP) are up 35% over the past month to $173.81, and they’re climbing 2% in afternoon trading.
Shopify stock’s run comes from two forces: a quarter of rapid growth and a steady climb in Wall Street’s earnings forecasts. A gain this large raises a fair question about whether Shopify stock has more room to run or whether it’s time to lock in some profits. The answer depends on how much weight investors put on growth versus valuation.
A Rally Built on Shopify Alone
Other e-commerce stocks have fell behind. For example, shares of MercadoLibre (NASDAQ:MELI) are up 5% over the past month to $1,868.19, a far smaller advance than the gain in Shopify shares.
Online retail funds have generally fallen behind SHOP stock during the past month. Shares of the Amplify Online Retail ETF (NYSEARCA:IBUY) are up 6% over the past month to $71.36. As a tech-sector gauge, the Invesco QQQ Trust (NASDAQ:QQQ) is down 0.3% over the past month to $719.15, which marks the rally in Shopify stock as company-specific.
Shopify’s business model sets it apart from both comparisons. The company sells subscription software and payment services to merchants that run their own online stores, while MercadoLibre runs a Latin American e-commerce and payments marketplace.
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A third model belongs to eBay (NASDAQ:EBAY), which operates an online marketplace that earns from transaction fees and a growing advertising business, with a recent push into recommerce. eBay stock is up 8% over the past month to $121.26.
