What Happened?

Shares of e-commerce software platform Shopify (NYSE:SHOP) jumped 25.7% in the afternoon session after the company reported impressive third-quarter financial results. GMV (gross merchandise value) exceeded analysts' expectations, enabling it to beat Wall Street's revenue estimates and provide Q4 revenue guidance that came in higher than anticipated. On top of that, its revenue growth accelerated, and it produced a 19.5% free cash flow margin, showing that it can balance growth and profits. Overall, we think this was a solid quarter that revealed improved growth momentum.

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What The Market Is Telling Us

Shopify’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. But moves this big are rare even for Shopify and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock gained 24.9% on the news that the company reported second quarter earnings results with revenue, gross merchandise value, free cash flow, and EPS exceeding Wall Street's expectations. 

Moving on, the company guided sales growth to be in the low to mid-20s percentage range for the next quarter, which is in line with analysts' estimates. Overall, it was a strong quarter for the company.

Shopify is up 53.1% since the beginning of the year, and at $112.90 per share, has set a new 52-week high. Investors who bought $1,000 worth of Shopify’s shares 5 years ago would now be looking at an investment worth $3,695.

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