Congratulations to all who have contributed to Shopify (BUSINESS 1.09%) before August 7. Following the release of second-quarter results on Wednesday morning, the stock shot up, ending the day up a whopping 18%.

The big move raises an equally big question: Is it too late to buy Shopify stock?

In one word: No.

Shopify shines again

Shopify helps businesses of all sizes build and manage an eCommerce presence with services like web-based shopping carts, payment processing, etc. It is estimated that there are between 2 and 4 million online stores powered by Shopify, which collectively serve millions of shoppers every day.

And they’re still buying in droves. Last quarter, the company sold $67.2 billion worth of goods and services and generated $2.0 billion in revenue, improvements of 22% and 21%, respectively, from a year ago and better than analysts expected.

Even better, Shopify bounced back from an accounting loss in the first quarter to a profit of $171 million, and management expects revenue and profits to continue to grow for the rest of the year. Analysts agree, forecasting 22% revenue growth and 32% profit growth this year. Next year (and beyond) should be just as impressive.

Data source: StockAnalysis.com. Chart by author.

And that’s the curious part of the Shopify story lately: Despite strong second-quarter results and big gains this week, Shopify shares are still about 25% below their February peak and over 60% below their all-time high. What’s going on?

The recent bout of weakness is the result of a lackluster first quarter, or more specifically, the second quarter guidance provided in this report. The company had said in May that it only expected high double-digit revenue growth for the second quarter, below its historical growth pace. CFO Jeff Hoffmeister’s comments about “currency-related headwinds due to the strong U.S. dollar and some weakness in European consumer spending” further scared investors and extended the weakness that was first felt a few weeks earlier.

Now the market is realizing that abandoning Shopify so quickly may have been a mistake.

A cyclical And secular tailwind

The main argument for investing in this e-commerce technology company remains a numbers-based one. It has shown strong growth in the past and is expected to continue to grow for the foreseeable future. It is also profitable again after the increase in profits during the COVID-19 pandemic. Only this time it is designed to be in the black.

The other argument for owning a share in Shopify, however, is more philosophical. Shopify is already operating where e-commerce is heading.

In the early days of the Internet, consumers and businesses alike relied on platforms such as eBay And Amazon to act as a shopping intermediary. But time and technology are making this dependence on such middlemen at least partially obsolete. Consumers can now find products offered directly by the brands themselves. In fact, it can be argued that Amazon and eBay have grown too big for the good of many of their merchants, pitting them against each other (and in the case of Amazon, against the tech giant itself). Shopify offers the obvious alternative.

But that’s just the tip of the iceberg of opportunities. Shopify merchants’ stores only account for about a tenth of annual e-commerce sales in the US and only about 6% of the online shopping sector in Western Europe (where the business is still relatively new). The rest is business to be won.

Meanwhile, the e-commerce market itself continues to grow, and there’s plenty of room for more growth. According to the U.S. Census Bureau, less than 16% of the country’s retail sales are currently done online. While some of that will always be done in-store, much of the remaining 84% is still up for grabs. Market research firm Oberlo expects U.S. e-commerce industry sales to grow 10.5% this year and then accelerate slightly each year through 2027.

If you connect the dots, you’ll see that there’s still a lot of growth potential here for Shopify.

Lots of potential

As promising as the business may be, owning Shopify stock is not for the faint of heart. The shares have been subject to extreme volatility in recent years.

For those willing to be the springboard, the key is to remain patient enough for the stock to reflect how well that company is capitalizing on its opportunity.

If you’re still unsure, this might help. Of the 51 analysts covering Shopify stock, 30 recommend buying the stock, and the rest advise at least holding. None advise selling. Consider making your move before the stock experiences another week of rising prices.