Shopify will report results Tuesday morning, and the market is already treating the company like a test case for whether its growth story still has room to run. The shares have climbed 7.2% over the last month, even as investors wait to see whether the company can keep pace with expectations that revenue will rise 31.1% year on year this quarter.
Last quarter gave bulls plenty to point to. Shopify reported revenue of $3.67 billion, up 30.6% from a year earlier, and beat analysts’ estimates for both adjusted earnings before interest, taxes, depreciation and amortization and gross merchandise volume. That kind of result has helped build a record that matters now because the company has a history of clearing Wall Street’s bar, and the bar is high again going into Tuesday.
The latest run-up in the stock also fits a wider move in the sales and marketing software segment, where shares have risen 8.7% on average over the last month. Shopify, though, has outpaced that group and is now trading at $127.41, below the average analyst price target of $159.49. Analysts have not rushed to change their numbers either: over the last 30 days, the majority covering the company reconfirmed their estimates, suggesting they are waiting on the earnings release rather than rewriting the story before it lands.
That is where the comparison with peers becomes useful. GoDaddy posted year-on-year revenue growth of 6.1% in its latest quarter, met analysts’ expectations and rose 3% after reporting. Zeta Global did much better on growth, with revenue up 49.9% and results that topped estimates by 7%, but its stock finished unchanged. Shopify sits between those reactions: the market has rewarded the shares ahead of the print, but not to the point of assuming a blowout is already in hand.
The real question for Tuesday morning is not whether Shopify can still grow. It is whether it can keep growing at a pace that justifies the premium investors have assigned to it after a month of gains and another quarter that set a demanding benchmark. If it misses, the gap between price and expectations could close fast. If it beats again, the stock stock narrative gets another leg up.