The bar looks low for Shopify (SHOP)

2024 has felt like the year of foot traffic -- at least when it comes to what investors are listening for on company earnings calls.

But does this mean we should count Shopify out?

No way.

eCommerce is still a growing piece of the retail pie...albeit growing at a slower clip vs. peak pandemic activity.

Online purchases are expected to comprise just over 20% of all purchases in 2024 and continue to march steadily higher in the coming years. But the growth rate at large is cooling, hovering near single digits after an explosive uptick 4 years ago.

This macro trend expansion coupled with a novel approach to eCommerce has helped Shopify achieve major milestones.

In 2023 Shopify revenue crossed $7 billion, gross profit hit $1 billion in the fourth quarter, and the company generated north of $900 million free cash flow for the year.

LikeFolio data shows growing interest in the one-stop-shop eCommerce enabler, with web visits up +52% on a YoY basis.

Shopify's accelerated checkout, Shop Pay, drives a significant amount of consumer mentions in our universe. Last quarter the service processed $18 billion of GMV (+58% YoY) and counted 150 million new buyers. The concept makes sense. Instead of having to log into and remember another password for a retail site, users can use shop pay to check out quickly with info likely already stored on their phones. Merchants report a +50% bump in conversion rates when Shop Pay is used vs. traditional guest checkout.

The kicker? The company reported weak guidance last quarter, sending shares -13% lower following its Q4 report.

We do see some tempering in mention volume, but web visits look strong.

In addition, SHOP shares are trading -5% lower than they were 3 months ago.

We are betting some of the slowdown in growth is already priced into the stock, and that Shopify may be well-poised to clear a lowered bar.