Today there was good news from Canada. Online shopping platform Shopify (TSE:SHOP), ticked up fractionally in Monday morning’s trading thanks to some recovery in Canadian retail sales for the third quarter. The latest numbers available suggest that Canadian retail could be making a larger comeback, especially with the critical holiday shopping season about to kick off in earnest in a matter of weeks.
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July’s numbers saw a decent improvement, and there are signs that, once the August numbers have been appropriately crunched, they too will produce excellent sales figures as well. A sharp rise in retail sales is projected, and should that turn out to be the case, it would suggest a recovery in the making. Given the previous two quarters looked a lot less positive, Canada’s July report on consumer spending will be welcome news to retailers all across the spectrum.
Statistics Canada is looking for a gain of 0.08% for Q3 if September’s growth turns out to be flat. This is good news, as retail sales posted a 0.04% loss in the second quarter of 2024 and a 0.05% loss in the first quarter. As long as September does not turn out to be a disaster, a recovery looks to be in progress already.
Making Hay While the Iron is Hot
Shopify is capitalizing on the Canadian retail market recovery, and has a platform that is easy to work with. Just a couple weeks ago, Shopify partnered with PayPal (PYPL) to simplify shopping on their platform in the United States.
The new deal called for PayPal wallet transactions to directly link with Shopify Payments, a move that would, in turn, offer a “consolidated view for merchants.” It would also make order processing, payouts and reporting, and even chargeback operations, flow more smoothly. This, combined with the gradual rebound of the retail market, should give Shopify a little extra edge going forward.
Is TSE:SHOP a Good Stock to Buy Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:SHOP stock based on 23 Buy and 11 Hold ratings assigned in the past three months, as indicated by the graphic below. After a 48.55% rally in its share price over the past year, the average TSE:SHOP price target of C$107.41 per share implies 0.33% upside potential.
