Shopify Inc. has become Canada’s largest public company, soaring past the nation’s largest bank amid growing conviction the future of retailing lies online.
The e-commerce company’s shares jumped 6.8% to a record, pushing its market value to C$121.6 billion ($86.1 billion). That nudged it past Royal Bank of Canada, which was up 0.1% to a market value of C$120.8 billion.
Shopify’s soared Wednesday after reporting first-quarter revenue that topped analysts’ expectations as it brought more businesses online during the coronavirus pandemic.
Sales grew by 47% to $470 million from the same quarter a year ago, Ottawa-based Shopify said in a statement Wednesday. Analysts had expected about $443 million, according to data compiled by Bloomberg.
Shares of the company, which launched its Shopify platform in 2006, have doubled this year, making it the best-performing Canadian company on the S&P/TSX Composite Index. Shares of Royal Bank, incorporated in 1869, have dropped 17%.
“We are working as fast as we can to support our merchants by re-tooling our products to help them adapt to this new reality,” Chief Executive Officer Tobi Lutke said in the quarterly release.
The key metric of gross merchandise volume, which represents the value of all goods sold on the platform, increased 46% or $5.5 billion to $17.4 billion from a year earlier. Analysts were expecting a 40% increase on a year-over-year basis to $16.9 billion.
Still, Shopify noted the drop in point-of-sale purchases from bricks-and-mortar stores and questioned the sustainability of some of the online switch.
Shopify suspended its 2020 financial guidance in April. Today, it said it is closely monitoring the impact rising unemployment has on new shop creation on its platform and consumer spending, the rate at which consumer spending habits transition to online shopping and the ability of brick-and mortar retail merchants to shift sales online.
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