Shopify Shares Q4 Earnings

Shopify Beats Expectations as Ecommerce Continues to Boom

Shopify (SHOP) shared fourth quarter earnings and sales which handily beat expectations yesterday. The Ottawa-based ecommerce company’s adjusted earnings were $1.98 million. Its revenue was $977.7 million for the quarter—up 94% from the same period a year ago.

Demand for Shopify’s services has surged during the pandemic. Last quarter in particular, businesses turned to the platform during the holiday shopping season.

Threats to Shopify

Shopify’s business model is not without its risks. The company has over one million customers and most of them are first-time entrepreneurs. As unemployment surged during the pandemic, many started their own businesses and turned to Shopify for help. But if the labor market regains strength, some of these people might return to working for larger companies rather than continuing to operate their small businesses.

Shopify might also face more intense competition in the coming months. For example, Amazon (AMZN) recently acquired Selz, an Australian company providing ecommerce services. Amazon plans to grow the company and help it compete with Shopify.

“Normalized Pace of Growth” Expected in 2021

Many analysts expect that online shopping habits formed during the pandemic will be here to stay. As the economy regains strength and consumers have more disposable income, they might spend even more money on ecommerce.

While Shopify expects its business to stay strong even as more people are vaccinated and can return to brick-and-mortar stores, its leadership anticipates a more “normalized pace of growth” in 2021.

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