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Shopify doubled its dimension in 2020. Can it preserve the momentum stepping into 2021?

The increase in sales is due to both an increase in dealerships and an increase in buyers who are not expected to wear off.

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18, 2021

3 min read

This story originally appeared on MarketBeat

If you are in doubt about the impact the pandemic has on e-commerce and what it means to business today, Shopify (NYSE: SHOP) is the place for you. Shopify is a cloud-based platform for merchants and retailers that connects them to the services and customers they need. The platform is essentially a white label service that enables retailers to build an entire e-commerce channel without having to hire technical specialists or buy their own hardware. Although stocks have fallen after the report, the outlook for 2021 is very positive. Investors looking to delve into one of the fastest growing trends in the market should consider this weakness as an entry point.

Shopify was expected to see significant growth over the 2020 period, but it wasn't expected to double in size. Revenue for the fourth quarter of $ 977.74 million increased not only 93.6% year over year, but sequentially increased 26%, beating consensus by 700 basis points. The increase in sales is due to both an increase in dealerships and an increase in buyers who are not expected to wear off.

The company's two operating segments, Subscription Services and Merchant Services, saw significant increases, with Merchant Services faring significantly better. The monthly recurring revenue associated with these services increased 10% sequentially and 53% year over year.

In terms of volume of goods, the company's gross volume of goods increased 99% under the combined influence of new dealers and new buyers, with the volume of gross payments also increasing. Gross payment volume, the volume of goods handled by the company's own payment processing system, rose to $ 19.1 billion, or 46% of sales.

The only negative about the report is the company's policy which is more of a caution than an outlook on the results. According to the CFO, the first quarter of 2021 is likely to be the weakest period in terms of growth, and results are likely to be more evenly spread across the four quarters of the year. At the same time, the company sees the possibility that retail sales may turn away from e-commerce in the second half of the year as vaccinations continue to spread. The bottom line is that robust growth is expected to continue, albeit at a slightly slower pace than 2020, and trends in the economy will continue to support that growth going forward.

“Our outlook for 2021 is that as the macroeconomic environment is likely to improve, as countries roll out vaccines and move around more freely in 2021, some consumer spending is likely to return to offline retail and services Postpone further The accelerated e-commerce in 2020 is likely to return to a more normal pace of growth. "

The technical outlook

Shopify's shares fell on the report, but there are already signs of a buy in the market. The near-term outlook remains bearish as stocks move back down early but the uptrend is still intact. Price action could fall another 20% before being firmly supported on the uptrend line. In this scenario, confirming the trend should be seen as a strong entry signal. In the meantime, there is a chance the short-term 30-day EMA could kick in support. If the 30 day EMA is confirmed as support, it should also be viewed as an entry point. In the longer term, convergences in the MACD suggest that the stock will at least retest its recently set all-time highs.

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