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| Meta Title | Shopify Stock A Buy In March 2022? E-Commerce Leader SHOP Stock Makes A New Low After Dramatic Rise And Plunge | Investor's Business Daily | ||||||||||||
| Meta Description | Investors bet big on Shopify stock, which has a new partner in China giant JD.com. Is SHOP stock a buy in March 2022? | ||||||||||||
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| Boilerpipe Text | Shopify
(
SHOP
), the upstart challenging
eBay
(
EBAY
) andÂ
Amazon.com
(
AMZN
), has expanding partnerships with Google and Facebook as online shopping grows. But is Shopify stock a buy in May 2021?
↑
X
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Economic Recovery Stocks Continue To Lead In Divided Market, Trip.com, Fluor, Boeing Surge
Shopify was started by snowboarding enthusiasts more than a decade ago. In fact, it started as an online snowboard shop, moving into e-commerce software when the founders couldn't find what they were looking for — a platform to both sell goods and grow their brand.
What Is Shopify And How Does It Work?
The e-commerce platform provider helps businesses set up shop online.
BigCommerce
(
BIGC
), a new IPO, is a close competitor. But tech stalwarts Google,Â
Amazon
(
AMZN
),
Microsoft
(
MSFT
),
Adobe
(
ADBE
) and
Facebook
(
FB
) have also made a push to provide e-commerce solutions for businesses
.
Across 175 countries, 1.75 million merchants use the SHOP platform to sell and market their products. In return, the software company earns subscription fees. Subscriptions range from $29 per month for entrepreneurs to $2,000 and up for large companies. It also offers shipping, digital payments and fulfillment, under the umbrella terms of merchant solutions.
Shopify estimates it now has a 9% share of the U.S. e-commerce retail market
— more than
eBay
(
EBAY
),
Apple
(
AAPL
) and
Walmart
(
WMT
), but below Amazon, which has a 39% share.
SHOP Earnings And Fundamentals
For the first quarter of 2021,Â
Shopify earnings
came in at an adjusted $2.01 per share including a $1.3 billion investment gain. Revenue jumped 110% to $988.6 million.
(Shopify)
In Q1, revenue from merchant solutions climbed 137% to $668 million vs. estimates of $560 million. Revenue from subscriptions rose 71% to $320.7 million vs. estimates of $284 million. Gross merchandise volume, or the total value of all goods sold on the Shopify platform, soared 114% to $37.3 billion vs. estimates of $32.54 billion.
Wall Street expects Shopify earnings to rise 8% to $4.32 per share in all of 2021, according to FactSet. Revenue is seen climbing 52% to $4.44 billion.
Both merchants and consumers pivoted online during the pandemic, benefiting Shopify. But SHOP warned of slower revenue growth ahead after a blowout 2020.
Shopify's financial outlook continues to assume that "as countries roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve." It expects some rotation in consumer spending back to offline retail and "a more normalized pace" of e-commerce growth.
On key earnings and sales metrics, Shopify stock earns an unbeatable
EPS Rating
of 99, and an
SMR Rating
of A, on a scale of A-E, with A the best. The EPS rating compares a company's earnings growth to other companies, and its SMR Rating measures sales growth, profit margins and return on equity.
Over the past three years, Shopify grew earnings 178% on average and sales 62%. Investors should generally look for stocks with sustained earnings and sales growth of at least 25%. So SHOP stock is far ahead on both counts.
The hot software stock has a 16% annual profit margin, the
IBD Stock Checkup tool
shows. Its 10% return on equity is under the minimum 17% that investors would want to see.
IBD Live: A New Tool For Daily Stock Market Analysis
Shopify Stock Technical Analysis
On July 7, the
IBD Leaderboard stock
briefly topped a 1,552.33 cup-with-handle
buy point
, according to
MarketSmith chart analysis
. Much of the pattern formed below the 10-week line, a negative, and Shopify stock is now back below the entry.
The
relative strength line
for SHOP stock is lackluster, below the consolidation peak and moving sideways during the handle formation. An upward spike would be a positive sign. A rising RS line means that a stock is outperforming the S&P 500 index. It is the blue line in the chart shown.
Shopify stock earns aÂ
Composite Rating
of 95 out of 99. The rating combines key
fundamental and technical metrics
 in a single score.
Its 84Â
RS Rating
 means that its performance is in the top 84% of all stocks over the past year.
The
Accumulation/Distribution Rating
of A- reflects heavy buying by institutions over the past 13 weeks. As of June, 1,963 funds owned Shopify stock. But SHOP shows zero quarters of rising fund ownership, according to the
IBD Stock Checkup
tool.
How To Research Growth Stocks: This IBD Tool Simplifies The Search
Coronavirus Impact On Shopify Stock
In 2020, Shopify emerged as a clear coronavirus stock winner. The pandemic drove up online buying and selling, with more consumers and merchants turning to the Shopify platform.
Shopify is investing heavily to grow. In 2021, key areas of investment include the Shopify Fulfillment Network, the Shopify app and international expansion. It's also integrating 6 River Systems, a 2019 acquisition that makes warehouse software and robots, into its distribution network.
Analysts call the company a structural winner from the pandemic boost to e-commerce. Goldman Sachs forecasts that global e-commerce will grow 19% annually over the next three years, up from a prior view of 16%.
IBD Stock Of The Day: See How To Find, Track And Buy The Best Stocks
Spending On Shopify Tops eBay — Amazon Next?
Shopify has now surpassed eBay in gross merchandise volume. But it's not itself a retailer. Rather, it provides merchants with the software tools to build websites for selling products and managing their business, under their own domain name and brand.
Shopify had several achievements in Q1:
It further built out Shopify Fulfillment Network, a service that uses software tools and deep learning to get orders to customers quickly and cost effectively.
Shopify could break even
on this $1 billion investment by 2023, analysts say.
It also grew programs to lend to businesses (Shopify Capital), and to help merchants mail online orders with less friction (Shopify Shipping).
It continued to develop Shop, its all-in-one mobile shopping assistant, alongside Shop Pay, its faster checkout tool, and the Shop App.
Shopify's leveraging partnerships to grow, including one with viral video-sharing app TikTok. Other partners include
Alibaba
(
BABA
),
Walmart
(
WMT
),
Facebook
(
FB
),
Pinterest
(
PINS
) and Google, a unit of
Alphabet
(
GOOGL
).
Analysts at KeyBanc Capital Markets believe that
Shopify could eventually levy an e-commerce fee from merchants
, similar to Amazon.
However, more and more companies seek to provide e-commerce software services. Adobe acquired e-commerce technology firm Magento in 2018. Microsoft launched Dynamics 365 in 2019. Partners Facebook and Google introduced shopping tools in 2020.
In February, Amazon acquired Selz, a Shopify rival that helps small businesses to build online stores.
Catch The Next Big Winning Stock With MarketSmith
SHOP Stock Group
Shopify belongs to IBD's Computer Software-Enterprise group, which ranks No. 72 out of 197 industry groups. But SHOP stock is a leading stock in its group, behind
Digital Turbine
(
APPS
). The enterprise software group has been a big winner, but recently investors shifted money into cyclical sectors and value stocks.
During the coronavirus pandemic, enterprise software stocks emerged as winners because of remote working and learning.
Stocks to watch in this group include
Salesforce
(
CRM
)
, Twilio
(
TWLO
) and
 Paycom Software
(
PAYC
). Other members include
ServiceNow
(
NOW
),
DocuSign
(
DOCU
),
Workday
(
WDAY
) and
Zoom Video
(
ZM
).
Digital Turbine
(
APPS
) and
Dynatrace
(
DT
) are also stocks to watch in this group. Many of these software companies, including SHOP, are current or former
IBD 50 stocks
.
Like Shopify stock, ServiceNow and DosuSign belong in
IBD Leaderboard
, a curated list of stocks with the most potential for big gains.
Stocks To Watch: Top-Rated IPOs, Big Caps And Growth Stocks
Is Shopify Stock A Buy In May 2021?
Shopify ticks off many of the boxes that investors should be looking for. It was a big winner in 2019 and 2020, solidifying its threat to eBay and Amazon. Key acquisitions and expansions promise more runway for growth. New and expanded partnerships with Google, Facebook and Alibaba could move the needle.
The software company boasts huge earnings and sales growth, but the scorching pace is poised to slow, as pandemic-fueled gains ease and as Shopify invests in growth.
From a technical perspective, SHOP stock is roughly 6% below a 1,552.33
buy point
after briefly breaking out. Its RS line is uninspiring.
Bottom line: Shopify stock is not a buy in May 2021.
For ideas about
large-cap stocks to buy right now
, check out the link.
To find theÂ
best stocks to buy or watch
, check out
IBD Stock Lists
and other
IBD research
.
YOU MAY ALSO LIKE:
Is It Time To Buy Or Sell These Large-Cap Stocks?
These Are The 5 Best Stocks To Buy And Watch Now
Stocks To Watch: Top-Rated IPOs, Big Caps And Growth Stocks
Find The Latest Stocks Hitting Buy Zones With MarketSmith | ||||||||||||
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# Is Shopify Stock A Buy In May 2021 As Tech Partnerships Expand?
[](https://www.investors.com/#facebook "Facebook")[](https://www.investors.com/#x "X")[](https://www.investors.com/#linkedin "LinkedIn")[](https://www.addtoany.com/share)
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- [APARNA NARAYANAN](https://www.investors.com/author/narayanana/ "Posts by APARNA NARAYANAN")
- Updated 11:38 AM ET 02/03/2023
**Shopify** ([SHOP](https://research.investors.com/quote.aspx?symbol=SHOP)), the upstart challenging **eBay** ([EBAY](https://research.investors.com/quote.aspx?symbol=EBAY)) and **Amazon.com** ([AMZN](https://research.investors.com/quote.aspx?symbol=AMZN)), has expanding partnerships with Google and Facebook as online shopping grows. But is Shopify stock a buy in May 2021?
↑ X
[Economic Recovery Stocks Continue To Lead In Divided Market, Trip.com, Fluor, Boeing Surge](https://www.investors.com/ibd-videos/videos/economic-recovery-stocks-continue-to-lead-in-divided-market-trip-com-fluor-boeing-surge)
[See All Videos](https://www.investors.com/ibd-videos)
NOW PLAYING Economic Recovery Stocks Continue To Lead In Divided Market, Trip.com, Fluor, Boeing Surge
Shopify was started by snowboarding enthusiasts more than a decade ago. In fact, it started as an online snowboard shop, moving into e-commerce software when the founders couldn't find what they were looking for — a platform to both sell goods and grow their brand.
## What Is Shopify And How Does It Work?
The e-commerce platform provider helps businesses set up shop online. **BigCommerce** ([BIGC](https://research.investors.com/quote.aspx?symbol=BIGC)), a new IPO, is a close competitor. But tech stalwarts Google, **Amazon** ([AMZN](https://research.investors.com/quote.aspx?symbol=AMZN)), **Microsoft** ([MSFT](https://research.investors.com/quote.aspx?symbol=MSFT)), **Adobe** ([ADBE](https://research.investors.com/quote.aspx?symbol=ADBE)) and **Facebook** ([FB](https://research.investors.com/quote.aspx?symbol=FB)) have also made a push to provide e-commerce solutions for businesses.
Across 175 countries, 1.75 million merchants use the SHOP platform to sell and market their products. In return, the software company earns subscription fees. Subscriptions range from \$29 per month for entrepreneurs to \$2,000 and up for large companies. It also offers shipping, digital payments and fulfillment, under the umbrella terms of merchant solutions.
[Shopify estimates it now has a 9% share of the U.S. e-commerce retail market](https://s23.q4cdn.com/550512644/files/doc_financials/2020/q4/Shopify-Investor-Deck-Q4-2020.pdf) — more than **eBay** ([EBAY](https://research.investors.com/quote.aspx?symbol=EBAY)), **Apple** ([AAPL](https://research.investors.com/quote.aspx?symbol=AAPL)) and **Walmart** ([WMT](https://research.investors.com/quote.aspx?symbol=WMT)), but below Amazon, which has a 39% share.
## SHOP Earnings And Fundamentals
For the first quarter of 2021, [Shopify earnings](https://www.investors.com/news/technology/shopify-stock-shop-earnings-q12021/) came in at an adjusted \$2.01 per share including a \$1.3 billion investment gain. Revenue jumped 110% to \$988.6 million.
[](https://www.investors.com/wp-content/uploads/2019/04/Stock-ShopifyOffice-01-company.jpg)
(Shopify)
In Q1, revenue from merchant solutions climbed 137% to \$668 million vs. estimates of \$560 million. Revenue from subscriptions rose 71% to \$320.7 million vs. estimates of \$284 million. Gross merchandise volume, or the total value of all goods sold on the Shopify platform, soared 114% to \$37.3 billion vs. estimates of \$32.54 billion.
Wall Street expects Shopify earnings to rise 8% to \$4.32 per share in all of 2021, according to FactSet. Revenue is seen climbing 52% to \$4.44 billion.
Both merchants and consumers pivoted online during the pandemic, benefiting Shopify. But SHOP warned of slower revenue growth ahead after a blowout 2020.
Shopify's financial outlook continues to assume that "as countries roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve." It expects some rotation in consumer spending back to offline retail and "a more normalized pace" of e-commerce growth.
On key earnings and sales metrics, Shopify stock earns an unbeatable [EPS Rating](https://www.investors.com/ibd-university/find-evaluate-stocks/exclusive-ratings/) of 99, and an [SMR Rating](https://education.investors.com/financialdictionary.aspx?mode=1&term=SMR+Rating&termid=1) of A, on a scale of A-E, with A the best. The EPS rating compares a company's earnings growth to other companies, and its SMR Rating measures sales growth, profit margins and return on equity.
Over the past three years, Shopify grew earnings 178% on average and sales 62%. Investors should generally look for stocks with sustained earnings and sales growth of at least 25%. So SHOP stock is far ahead on both counts.
The hot software stock has a 16% annual profit margin, the [IBD Stock Checkup tool](https://research.investors.com/stock-checkup/nyse-shopify-inc-cl-a-shop.aspx) shows. Its 10% return on equity is under the minimum 17% that investors would want to see.
***
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***
## Shopify Stock Technical Analysis
On July 7, the [IBD Leaderboard stock](https://leaderboard.investors.com/#/leaders/leadersnearabuypoint) briefly topped a 1,552.33 cup-with-handle [buy point](https://www.investors.com/how-to-invest/investors-corner/chart-reading-basics-how-a-buy-point-marks-a-time-of-opportunity/), according to [MarketSmith chart analysis](https://www.investors.com/product/marketsmith/?artProdLink=MarketSmith). Much of the pattern formed below the 10-week line, a negative, and Shopify stock is now back below the entry.
The [relative strength line](https://www.investors.com/how-to-invest/investors-corner/a-stock-breakout-specialty-tool-the-relative-strength-line/) for SHOP stock is lackluster, below the consolidation peak and moving sideways during the handle formation. An upward spike would be a positive sign. A rising RS line means that a stock is outperforming the S\&P 500 index. It is the blue line in the chart shown.
Shopify stock earns a [Composite Rating](https://www.investors.com/how-to-invest/investors-corner/the-ibd-composite-rating/) of 95 out of 99. The rating combines key [fundamental and technical metrics](https://www.investors.com/how-to-invest/investors-corner/technical-analysis/) in a single score.
Its 84 [RS Rating](https://www.investors.com/ibd-university/find-evaluate-stocks/exclusive-ratings/) means that its performance is in the top 84% of all stocks over the past year.
The [Accumulation/Distribution Rating](http://www.investors.com/ibd-university/find-evaluate-stocks/exclusive-ratings/) of A- reflects heavy buying by institutions over the past 13 weeks. As of June, 1,963 funds owned Shopify stock. But SHOP shows zero quarters of rising fund ownership, according to the [IBD Stock Checkup](https://research.investors.com/stock-checkup/nyse-shopify-inc-cl-a-shop.aspx) tool.
***
**[How To Research Growth Stocks: This IBD Tool Simplifies The Search](https://www.investors.com/how-to-invest/investors-corner/how-to-research-growth-stocks/)**
***
## Coronavirus Impact On Shopify Stock
In 2020, Shopify emerged as a clear coronavirus stock winner. The pandemic drove up online buying and selling, with more consumers and merchants turning to the Shopify platform.
Shopify is investing heavily to grow. In 2021, key areas of investment include the Shopify Fulfillment Network, the Shopify app and international expansion. It's also integrating 6 River Systems, a 2019 acquisition that makes warehouse software and robots, into its distribution network.
Analysts call the company a structural winner from the pandemic boost to e-commerce. Goldman Sachs forecasts that global e-commerce will grow 19% annually over the next three years, up from a prior view of 16%.
***
**[IBD Stock Of The Day: See How To Find, Track And Buy The Best Stocks](https://www.investors.com/research/ibd-stock-of-the-day/)**
***
## Spending On Shopify Tops eBay — Amazon Next?
Shopify has now surpassed eBay in gross merchandise volume. But it's not itself a retailer. Rather, it provides merchants with the software tools to build websites for selling products and managing their business, under their own domain name and brand.
Shopify had several achievements in Q1:
- It further built out Shopify Fulfillment Network, a service that uses software tools and deep learning to get orders to customers quickly and cost effectively. [Shopify could break even](https://www.investors.com/news/technology/shopify-stock-shop-stock-fulfillment-business/?src=A00220&yptr=yahoo) on this \$1 billion investment by 2023, analysts say.
- It also grew programs to lend to businesses (Shopify Capital), and to help merchants mail online orders with less friction (Shopify Shipping).
- It continued to develop Shop, its all-in-one mobile shopping assistant, alongside Shop Pay, its faster checkout tool, and the Shop App.
Shopify's leveraging partnerships to grow, including one with viral video-sharing app TikTok. Other partners include **Alibaba** ([BABA](https://research.investors.com/quote.aspx?symbol=BABA)), **Walmart** ([WMT](https://research.investors.com/quote.aspx?symbol=WMT)), **Facebook** ([FB](https://research.investors.com/quote.aspx?symbol=FB)), **Pinterest** ([PINS](https://research.investors.com/quote.aspx?symbol=PINS)) and Google, a unit of **Alphabet** ([GOOGL](https://research.investors.com/quote.aspx?symbol=GOOGL)).
Analysts at KeyBanc Capital Markets believe that [Shopify could eventually levy an e-commerce fee from merchants](https://www.investors.com/research/ibd-stock-of-the-day/shopify-stock-pops-analyst-sees-potential-for-amazon-type-e-commerce-fee/), similar to Amazon.
However, more and more companies seek to provide e-commerce software services. Adobe acquired e-commerce technology firm Magento in 2018. Microsoft launched Dynamics 365 in 2019. Partners Facebook and Google introduced shopping tools in 2020.
In February, Amazon acquired Selz, a Shopify rival that helps small businesses to build online stores.
***
**[Catch The Next Big Winning Stock With MarketSmith](https://www.investors.com/product/marketsmith/?artProdLink=MarketSmith)**
***
## SHOP Stock Group
Shopify belongs to IBD's Computer Software-Enterprise group, which ranks No. 72 out of 197 industry groups. But SHOP stock is a leading stock in its group, behind **Digital Turbine** ([APPS](https://research.investors.com/quote.aspx?symbol=APPS)). The enterprise software group has been a big winner, but recently investors shifted money into cyclical sectors and value stocks.
During the coronavirus pandemic, enterprise software stocks emerged as winners because of remote working and learning.
Stocks to watch in this group include **Salesforce** ([CRM](https://research.investors.com/quote.aspx?symbol=CRM))**, Twilio** ([TWLO](https://research.investors.com/quote.aspx?symbol=TWLO)) and **Paycom Software** ([PAYC](https://research.investors.com/quote.aspx?symbol=PAYC)). Other members include **ServiceNow** ([NOW](https://research.investors.com/quote.aspx?symbol=NOW)), **DocuSign** ([DOCU](https://research.investors.com/quote.aspx?symbol=DOCU)), **Workday** ([WDAY](https://research.investors.com/quote.aspx?symbol=WDAY)) and **Zoom Video** ([ZM](https://research.investors.com/quote.aspx?symbol=ZM)).
**Digital Turbine** ([APPS](https://research.investors.com/quote.aspx?symbol=APPS)) and **Dynatrace** ([DT](https://research.investors.com/quote.aspx?symbol=DT)) are also stocks to watch in this group. Many of these software companies, including SHOP, are current or former [IBD 50 stocks](https://research.investors.com/stock-lists/ibd-50/).
Like Shopify stock, ServiceNow and DosuSign belong in [IBD Leaderboard](https://leaderboard.investors.com/#/leaders/leadersnearabuypoint), a curated list of stocks with the most potential for big gains.
***
**[Stocks To Watch: Top-Rated IPOs, Big Caps And Growth Stocks](http://www.investors.com/stock-lists/stocks-to-watch-top-rated-ipos-big-caps-and-growth-stocks/)**
***
## Is Shopify Stock A Buy In May 2021?
Shopify ticks off many of the boxes that investors should be looking for. It was a big winner in 2019 and 2020, solidifying its threat to eBay and Amazon. Key acquisitions and expansions promise more runway for growth. New and expanded partnerships with Google, Facebook and Alibaba could move the needle.
The software company boasts huge earnings and sales growth, but the scorching pace is poised to slow, as pandemic-fueled gains ease and as Shopify invests in growth.
From a technical perspective, SHOP stock is roughly 6% below a 1,552.33 [buy point](https://www.investors.com/how-to-invest/investors-corner/chart-reading-basics-how-a-buy-point-marks-a-time-of-opportunity/) after briefly breaking out. Its RS line is uninspiring.
Bottom line: Shopify stock is not a buy in May 2021.
For ideas about [large-cap stocks to buy right now](https://www.investors.com/research/stocks-to-buy-or-sell-large-cap-stocks/), check out the link.
To find the [best stocks to buy or watch](https://www.investors.com/stock-lists/stocks-to-watch-top-rated-ipos-big-caps-and-growth-stocks/), check out [IBD Stock Lists](https://ibdstockscreener.investors.com/) and other [IBD research](https://research.investors.com/).
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| Readable Markdown | **Shopify** ([SHOP](https://research.investors.com/quote.aspx?symbol=SHOP)), the upstart challenging **eBay** ([EBAY](https://research.investors.com/quote.aspx?symbol=EBAY)) and **Amazon.com** ([AMZN](https://research.investors.com/quote.aspx?symbol=AMZN)), has expanding partnerships with Google and Facebook as online shopping grows. But is Shopify stock a buy in May 2021?
↑ X NOW PLAYING Economic Recovery Stocks Continue To Lead In Divided Market, Trip.com, Fluor, Boeing Surge
Shopify was started by snowboarding enthusiasts more than a decade ago. In fact, it started as an online snowboard shop, moving into e-commerce software when the founders couldn't find what they were looking for — a platform to both sell goods and grow their brand.
## What Is Shopify And How Does It Work?
The e-commerce platform provider helps businesses set up shop online. **BigCommerce** ([BIGC](https://research.investors.com/quote.aspx?symbol=BIGC)), a new IPO, is a close competitor. But tech stalwarts Google, **Amazon** ([AMZN](https://research.investors.com/quote.aspx?symbol=AMZN)), **Microsoft** ([MSFT](https://research.investors.com/quote.aspx?symbol=MSFT)), **Adobe** ([ADBE](https://research.investors.com/quote.aspx?symbol=ADBE)) and **Facebook** ([FB](https://research.investors.com/quote.aspx?symbol=FB)) have also made a push to provide e-commerce solutions for businesses.
Across 175 countries, 1.75 million merchants use the SHOP platform to sell and market their products. In return, the software company earns subscription fees. Subscriptions range from \$29 per month for entrepreneurs to \$2,000 and up for large companies. It also offers shipping, digital payments and fulfillment, under the umbrella terms of merchant solutions.
[Shopify estimates it now has a 9% share of the U.S. e-commerce retail market](https://s23.q4cdn.com/550512644/files/doc_financials/2020/q4/Shopify-Investor-Deck-Q4-2020.pdf) — more than **eBay** ([EBAY](https://research.investors.com/quote.aspx?symbol=EBAY)), **Apple** ([AAPL](https://research.investors.com/quote.aspx?symbol=AAPL)) and **Walmart** ([WMT](https://research.investors.com/quote.aspx?symbol=WMT)), but below Amazon, which has a 39% share.
## SHOP Earnings And Fundamentals
For the first quarter of 2021, [Shopify earnings](https://www.investors.com/news/technology/shopify-stock-shop-earnings-q12021/) came in at an adjusted \$2.01 per share including a \$1.3 billion investment gain. Revenue jumped 110% to \$988.6 million.
[](https://www.investors.com/wp-content/uploads/2019/04/Stock-ShopifyOffice-01-company.jpg)
(Shopify)
In Q1, revenue from merchant solutions climbed 137% to \$668 million vs. estimates of \$560 million. Revenue from subscriptions rose 71% to \$320.7 million vs. estimates of \$284 million. Gross merchandise volume, or the total value of all goods sold on the Shopify platform, soared 114% to \$37.3 billion vs. estimates of \$32.54 billion.
Wall Street expects Shopify earnings to rise 8% to \$4.32 per share in all of 2021, according to FactSet. Revenue is seen climbing 52% to \$4.44 billion.
Both merchants and consumers pivoted online during the pandemic, benefiting Shopify. But SHOP warned of slower revenue growth ahead after a blowout 2020.
Shopify's financial outlook continues to assume that "as countries roll out vaccines in 2021 and populations are able to move about more freely, the overall economic environment will likely improve." It expects some rotation in consumer spending back to offline retail and "a more normalized pace" of e-commerce growth.
On key earnings and sales metrics, Shopify stock earns an unbeatable [EPS Rating](https://www.investors.com/ibd-university/find-evaluate-stocks/exclusive-ratings/) of 99, and an [SMR Rating](https://education.investors.com/financialdictionary.aspx?mode=1&term=SMR+Rating&termid=1) of A, on a scale of A-E, with A the best. The EPS rating compares a company's earnings growth to other companies, and its SMR Rating measures sales growth, profit margins and return on equity.
Over the past three years, Shopify grew earnings 178% on average and sales 62%. Investors should generally look for stocks with sustained earnings and sales growth of at least 25%. So SHOP stock is far ahead on both counts.
The hot software stock has a 16% annual profit margin, the [IBD Stock Checkup tool](https://research.investors.com/stock-checkup/nyse-shopify-inc-cl-a-shop.aspx) shows. Its 10% return on equity is under the minimum 17% that investors would want to see.
***
**[IBD Live: A New Tool For Daily Stock Market Analysis](https://shop.investors.com/offer/splashresponsive.aspx?id=IBD-Live&intcode=invstcntnartcls%7Ccms%7Cibdlive%7C2020%7C07%7Cibdlive%7Cna%7C%7C727112&src=A00433A)**
***
## Shopify Stock Technical Analysis
On July 7, the [IBD Leaderboard stock](https://leaderboard.investors.com/#/leaders/leadersnearabuypoint) briefly topped a 1,552.33 cup-with-handle [buy point](https://www.investors.com/how-to-invest/investors-corner/chart-reading-basics-how-a-buy-point-marks-a-time-of-opportunity/), according to [MarketSmith chart analysis](https://www.investors.com/product/marketsmith/?artProdLink=MarketSmith). Much of the pattern formed below the 10-week line, a negative, and Shopify stock is now back below the entry.
The [relative strength line](https://www.investors.com/how-to-invest/investors-corner/a-stock-breakout-specialty-tool-the-relative-strength-line/) for SHOP stock is lackluster, below the consolidation peak and moving sideways during the handle formation. An upward spike would be a positive sign. A rising RS line means that a stock is outperforming the S\&P 500 index. It is the blue line in the chart shown.
Shopify stock earns a [Composite Rating](https://www.investors.com/how-to-invest/investors-corner/the-ibd-composite-rating/) of 95 out of 99. The rating combines key [fundamental and technical metrics](https://www.investors.com/how-to-invest/investors-corner/technical-analysis/) in a single score.
Its 84 [RS Rating](https://www.investors.com/ibd-university/find-evaluate-stocks/exclusive-ratings/) means that its performance is in the top 84% of all stocks over the past year.
The [Accumulation/Distribution Rating](http://www.investors.com/ibd-university/find-evaluate-stocks/exclusive-ratings/) of A- reflects heavy buying by institutions over the past 13 weeks. As of June, 1,963 funds owned Shopify stock. But SHOP shows zero quarters of rising fund ownership, according to the [IBD Stock Checkup](https://research.investors.com/stock-checkup/nyse-shopify-inc-cl-a-shop.aspx) tool.
***
**[How To Research Growth Stocks: This IBD Tool Simplifies The Search](https://www.investors.com/how-to-invest/investors-corner/how-to-research-growth-stocks/)**
***
## Coronavirus Impact On Shopify Stock
In 2020, Shopify emerged as a clear coronavirus stock winner. The pandemic drove up online buying and selling, with more consumers and merchants turning to the Shopify platform.
Shopify is investing heavily to grow. In 2021, key areas of investment include the Shopify Fulfillment Network, the Shopify app and international expansion. It's also integrating 6 River Systems, a 2019 acquisition that makes warehouse software and robots, into its distribution network.
Analysts call the company a structural winner from the pandemic boost to e-commerce. Goldman Sachs forecasts that global e-commerce will grow 19% annually over the next three years, up from a prior view of 16%.
***
**[IBD Stock Of The Day: See How To Find, Track And Buy The Best Stocks](https://www.investors.com/research/ibd-stock-of-the-day/)**
***
## Spending On Shopify Tops eBay — Amazon Next?
Shopify has now surpassed eBay in gross merchandise volume. But it's not itself a retailer. Rather, it provides merchants with the software tools to build websites for selling products and managing their business, under their own domain name and brand.
Shopify had several achievements in Q1:
- It further built out Shopify Fulfillment Network, a service that uses software tools and deep learning to get orders to customers quickly and cost effectively. [Shopify could break even](https://www.investors.com/news/technology/shopify-stock-shop-stock-fulfillment-business/?src=A00220&yptr=yahoo) on this \$1 billion investment by 2023, analysts say.
- It also grew programs to lend to businesses (Shopify Capital), and to help merchants mail online orders with less friction (Shopify Shipping).
- It continued to develop Shop, its all-in-one mobile shopping assistant, alongside Shop Pay, its faster checkout tool, and the Shop App.
Shopify's leveraging partnerships to grow, including one with viral video-sharing app TikTok. Other partners include **Alibaba** ([BABA](https://research.investors.com/quote.aspx?symbol=BABA)), **Walmart** ([WMT](https://research.investors.com/quote.aspx?symbol=WMT)), **Facebook** ([FB](https://research.investors.com/quote.aspx?symbol=FB)), **Pinterest** ([PINS](https://research.investors.com/quote.aspx?symbol=PINS)) and Google, a unit of **Alphabet** ([GOOGL](https://research.investors.com/quote.aspx?symbol=GOOGL)).
Analysts at KeyBanc Capital Markets believe that [Shopify could eventually levy an e-commerce fee from merchants](https://www.investors.com/research/ibd-stock-of-the-day/shopify-stock-pops-analyst-sees-potential-for-amazon-type-e-commerce-fee/), similar to Amazon.
However, more and more companies seek to provide e-commerce software services. Adobe acquired e-commerce technology firm Magento in 2018. Microsoft launched Dynamics 365 in 2019. Partners Facebook and Google introduced shopping tools in 2020.
In February, Amazon acquired Selz, a Shopify rival that helps small businesses to build online stores.
***
**[Catch The Next Big Winning Stock With MarketSmith](https://www.investors.com/product/marketsmith/?artProdLink=MarketSmith)**
***
## SHOP Stock Group
Shopify belongs to IBD's Computer Software-Enterprise group, which ranks No. 72 out of 197 industry groups. But SHOP stock is a leading stock in its group, behind **Digital Turbine** ([APPS](https://research.investors.com/quote.aspx?symbol=APPS)). The enterprise software group has been a big winner, but recently investors shifted money into cyclical sectors and value stocks.
During the coronavirus pandemic, enterprise software stocks emerged as winners because of remote working and learning.
Stocks to watch in this group include **Salesforce** ([CRM](https://research.investors.com/quote.aspx?symbol=CRM))**, Twilio** ([TWLO](https://research.investors.com/quote.aspx?symbol=TWLO)) and **Paycom Software** ([PAYC](https://research.investors.com/quote.aspx?symbol=PAYC)). Other members include **ServiceNow** ([NOW](https://research.investors.com/quote.aspx?symbol=NOW)), **DocuSign** ([DOCU](https://research.investors.com/quote.aspx?symbol=DOCU)), **Workday** ([WDAY](https://research.investors.com/quote.aspx?symbol=WDAY)) and **Zoom Video** ([ZM](https://research.investors.com/quote.aspx?symbol=ZM)).
**Digital Turbine** ([APPS](https://research.investors.com/quote.aspx?symbol=APPS)) and **Dynatrace** ([DT](https://research.investors.com/quote.aspx?symbol=DT)) are also stocks to watch in this group. Many of these software companies, including SHOP, are current or former [IBD 50 stocks](https://research.investors.com/stock-lists/ibd-50/).
Like Shopify stock, ServiceNow and DosuSign belong in [IBD Leaderboard](https://leaderboard.investors.com/#/leaders/leadersnearabuypoint), a curated list of stocks with the most potential for big gains.
***
**[Stocks To Watch: Top-Rated IPOs, Big Caps And Growth Stocks](http://www.investors.com/stock-lists/stocks-to-watch-top-rated-ipos-big-caps-and-growth-stocks/)**
***
## Is Shopify Stock A Buy In May 2021?
Shopify ticks off many of the boxes that investors should be looking for. It was a big winner in 2019 and 2020, solidifying its threat to eBay and Amazon. Key acquisitions and expansions promise more runway for growth. New and expanded partnerships with Google, Facebook and Alibaba could move the needle.
The software company boasts huge earnings and sales growth, but the scorching pace is poised to slow, as pandemic-fueled gains ease and as Shopify invests in growth.
From a technical perspective, SHOP stock is roughly 6% below a 1,552.33 [buy point](https://www.investors.com/how-to-invest/investors-corner/chart-reading-basics-how-a-buy-point-marks-a-time-of-opportunity/) after briefly breaking out. Its RS line is uninspiring.
Bottom line: Shopify stock is not a buy in May 2021.
For ideas about [large-cap stocks to buy right now](https://www.investors.com/research/stocks-to-buy-or-sell-large-cap-stocks/), check out the link.
To find the [best stocks to buy or watch](https://www.investors.com/stock-lists/stocks-to-watch-top-rated-ipos-big-caps-and-growth-stocks/), check out [IBD Stock Lists](https://ibdstockscreener.investors.com/) and other [IBD research](https://research.investors.com/).
**YOU MAY ALSO LIKE:**
[Is It Time To Buy Or Sell These Large-Cap Stocks?](https://www.investors.com/research/stocks-to-buy-or-sell-large-cap-stocks/)
[These Are The 5 Best Stocks To Buy And Watch Now](https://www.investors.com/research/best-stocks-to-buy-now/)
[Stocks To Watch: Top-Rated IPOs, Big Caps And Growth Stocks](http://www.investors.com/stock-lists/stocks-to-watch-top-rated-ipos-big-caps-and-growth-stocks/)
[Find The Latest Stocks Hitting Buy Zones With MarketSmith](https://www.investors.com/product/marketsmith/?artProdLink=MarketSmith) | ||||||||||||
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