Popular stock Shopify jumped on Wednesday after the Canadian e-commerce company beat estimates for second-quarter revenue as more brick-and-mortar retailers used its online platform during coronavirus-led lockdowns.
Shopify shares, which investors have bought en masse amid the Covid-19 pandemic, have rallied more than 100% over the last six months as consumer and business owners shift commerce online to slow the spread of the disease.
Shares rose 7.2% in premarket trading following the results, further extending Shopify's lead over Royal Bank of Canada as the country's largest company by market value.
That uptick in demand for e-commerce platforms accrued to Shopify in the second quarter. The company reported Wednesday morning that second-quarter revenue rose 97% to $714.3 million from a year earlier, beating the average analyst expectation of $513.83 million, according to Refinitiv IBES data.
"The strength of Shopify's value proposition was on full display in our second quarter," Shopify Chief Financial Officer Amy Shapero said in a release on Wednesday. "We are committed to transferring the benefits of scale to our merchants, helping them sell more and sell more efficiently, which is especially critical in this rapidly changing environment."
Shopify said in its earnings release that the ongoing effect of the Covid-19 pandemic has accelerated the shift of consumer purchasing habits to e-commerce. New stores created on Shopify grew 71% in the second quarter compared to the first quarter while gross merchandise volume popped 119% year over year.
The company had already turned heads on Wall Street prior to its blockbuster earnings report.
Goldman Sachs, which up until Tuesday had rated the Ottawa-based stock at "neutral," penned a mea culpa earlier this week and upgraded the equity to "buy." The bank reiterated its recently increased price target of $1,127, which represents more than 14% upside from Tuesday's close.
"With a unique customer acquisition funnel that has not only found unmatched success in SMB but increasingly the enterprise segment as well, we believe SHOP should be able to sustain hyper-growth for longer than the market expects," Goldman's Christopher Merwin wrote on Tuesday.
— Reuters contributed to this report.