The Moves That Have Shopify Investors Buzzing About SHOP Stock

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It’s exciting to see Shopify (NYSE:SHOP) stock heading higher this year after a rough 2022 – and it’s still not too late to invest! The company could produce outstanding quarterly results after divesting one of its non-core businesses. In addition, a notable team-up with an e-commerce behemoth should provide substantial benefit to Shopify.

Shopify, a provider of e-commerce software and services, could use a couple of positive catalysts to push its shares back to all-time highs. To that end, Shopify’s shareholders might not have to wait much longer. Indeed, with a “prime” collaboration (there’s a hint for you) in the works, Shopify is poised to deliver outstanding financial results and shareholder value.

The Partnership That Has SHOP Stock Traders Talking

For many years, Shopify has faced fierce competition in the e-commerce space from Amazon (NASDAQ:AMZN). Surely, Amazon’s powerful market presence has made it more difficult for Shopify to grow and succeed.

Yet, even rivals like Shopify and Amazon can work together when it’s mutually beneficial. Thus, Amazon is now giving U.S.-based Shopify merchants access to Amazon’s “Buy with Prime” option.
This cross-functionality will make the e-commerce experience for all parties concerned. As Shopify explained, the company’s “merchants who also use Amazon’s fulfillment network will have the option to add the Buy with Prime app from our app ecosystem directly into Shopify Checkout, processed by Shopify Payments.”

In other words, merchants can simultaneously use Shopify’s e-commerce tools and Amazon’s logistics network. While this looks like a win-win collaboration, Shopify is probably the biggest winner here as Amazon is a gigantic company with a vast merchant base. If Shopify gains trust and loyalty among some merchants through its association with Amazon, that’s great for Shopify.

Shopify Should Thrive Without Its Logistics Business

Meanwhile, people aren’t talking much about Shopify’s divestment of its logistics business anymore. They ought to consider it, though, since a leaner Shopify could deliver excellent financial results in its upcoming quarterly reports.

Just to recap, Shopify announced in May that it would sell its logistics business to Flexport. That deal was finalized in June.

Unfortunately, Shopify incurred an operating loss of “$1.6 billion which includes $1.7 billion in one-time items from the impairment and acceleration of stock-based compensation related to the sales of our logistics businesses, as well as severance. Excluding these one-time charges, operating income was positive for the quarter.”

In other words, a slimmer and trimmer Shopify should be able to focus on its core e-commerce competencies in the current and future quarters. Consequently, the company is likely to produce excellent top- and bottom-line results; investors should prepare for Shopify to report substantial operating income instead of a loss.

SHOP Stock Is a Solid Buy-and-Hold Investment

Even before the announcement of the Amazon collaboration, Shopify already seemed to be on the cusp of a comeback. By selling its logistics business, Shopify has opportunities to streamline its operations and focus on its core competencies.

Still, it’s exciting to witness Shopify and Amazon working together instead of just trying to steal each other’s market share. Thus, SHOP stock remains a great buy-and-hold asset as Shopify is likely to deliver outstanding results for the foreseeable future.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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