Shares of Shopify Inc. charged higher Monday after the e-commerce software company’s simple but exuberant reaction to record Black Friday sales — “cha-ching!”
The company said its merchants recorded best-ever sales of $3.36 billion globally on the Friday after the U.S. Thanksgiving holiday, a 17% increase over last year’s Black Friday sales.
“At its peak, merchants on Shopify saw sales of $3.5 million per minute at 12:01 p.m. [Eastern time] on Black Friday, collectively,” Shopify said. That was about 13% more than the peak figure from last year.
The top-selling categories were apparel and accessories, followed by health and beauty and home and garden, the company said. Those top categories were the same as last year’s.
The average cart price, however, was $102.31, up just 1.1% from a year ago.
That small increase in the current inflationary environment is one reason Benchmark analyst Mark Zgutowicz remains cautious on Shopify. He reiterated his hold rating on the stock.
“With Shopify (and its merchants) strapped with escalating customer acquisition costs, coupled with only moderate [Black Friday average order value] growth relative to recent +8% [in the consumer-price index], it suggests decelerating growth” in gross merchandise value coming into 2023, Zgutowicz wrote in a note to clients.
Oppenheimer’s Ken Wong was a little more upbeat about the Black Friday performance and outlook for gross merchandise value, especially given that retail sentiment was already biased negative.
Given the strong growth in Thursday and Friday sales, which represent nearly half the sales of the overall Black Friday-Cyber Monday period — and with Saturday and Sunday sales growth tracking roughly in line with Black Friday growth — Wong said Cyber Monday sales “would have to decelerate considerably (-10% to -15% by our estimate)” for the period to dip below consensus fourth-quarter gross merchandise value growth targets of 8%.
“We believe strong [Black Friday-Cyber Monday] trends coupled with three extra selling days sets the stage for [fourth-quarter gross merchandise value] re-acceleration,” Wong wrote. “Investor conversations suggest [gross merchandise value] inflection could flip sentiment positive.”
Shopify’s stock has run up 16.8% over the past three months, while the S&P 500 has lost 1.6%.