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In their research note, JMP Securities analysts wrote that they believe Shopify has “tremendous momentum” and is gaining share with both enterprise and offline merchants. However, they also noted that the company’s gross profit margins face new headwinds given lower payment take rates and non-payment Merchant Solution attach rates.
JMP Securities analysts also pointed out that its Shopify’s subscription estimates are below consensus. The analysts believe that this is due to the company’s focus on enterprise merchants, who typically subscribe to fewer Shopify services.
“Following the Shopify sales force reorganization earlier this year and with a maturing SI channel, we believe Shopify is better attracting enterprise merchants,” said JMP. “To that end, we believe GMV growth can be healthy; however, Plus merchants have lower payment fees, and we believe payment gross profit margins may be ~20 points lower for Plus merchants versus Basic merchants.”
The analysts stated they are “moving to the sidelines” on the stock and are waiting for a more attractive valuation.
