Shopify Stock Is Soaring Again What Could Be The Factor

The bull market is back, and so is pandemic favorite Shopify (NYSE: SHOP). After posting robust growth and showing strong operating leverage in the third quarter, the e-commerce platform gained more than 30% in the last five trading days and is closing in on a market cap of $80 billion. Shopify is still down by 63% from the all-time high it set in 2021, which could indicate there is still more room to run here.

Shopify's Q3 earnings were strong across the board. As the software backbone for many online sellers, Shopify grows along with the overall e-commerce sector. It makes money through its core software subscriptions, by processing payments, and by selling add-on services to its merchant customers.

In the quarter, Shopify's revenue grew 25% year over year to $1.7 billion. Factor out last year's revenue from its logistics and delivery services business -- which the company divested itself of earlier this year -- and the growth rate was an even more impressive 30%.

Shopify sold the delivery services business to Flexport in a pivot to refocus solely on the digital world, providing software services to online merchants. This is already showing up in the company's profit margins. In the quarter, Shopify's gross margin was 52.6% compared to 48.5% in 2022.

Gains
Shopify generated $122 million in operating income in Q3, up from an operating loss of $346 million in the prior-year period.

Technical Analysist
Price Momentum
SHOP is trading near the top of its 52-week range and above its 200-day simple moving average.

What does this mean?
Investors have been pushing the share price higher, and the stock still appears to have upward momentum. This is a positive sign for the stock's future value.