Shopify Inc.'s (SHOP) stock surged over 5% in Monday's pre-market trading, driven by a confluence of factors including strong earnings expectations and a bullish broker upgrade.
The e-commerce platform provider is slated to report its fourth-quarter 2024 earnings on Tuesday before the market opens. Analysts are anticipating Shopify to report earnings per share of $0.43, representing a 28% year-over-year growth, along with a 27% increase in revenue to $2.73 billion.
Contributing to the optimism is Shopify's new partnership with digital payments giant PayPal (PYPL), which is expected to provide a boost to the company's revenue recognition. Under this partnership, Shopify will recognize sales from PayPal transactions on a gross revenue basis rather than net revenue, potentially bolstering its top-line growth.
Adding fuel to the stock's rally is a upgrade from Benchmark, which raised its rating on Shopify to "Buy" from "Hold" and set a price target of $150 on the shares. The brokerage's bullish call ahead of the earnings release has further buoyed investor sentiment.
Overall, the market appears to be pricing in a strong earnings report from Shopify, coupled with the potential positive impact from its PayPal collaboration. As the e-commerce landscape continues to evolve, investors will keenly watch for Shopify's efforts to capitalize on emerging trends and maintain its growth momentum.
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