11:20 AM EDT, 09/23/2024 (MT Newswires) -- Shopify ( SHOP ) is accelerating new merchant additions on a sequential basis in the third quarter but growth initiates will likely cap near-term margins and take rates, Oppenheimer said in a note emailed Monday.

The e-commerce platform is investing marketing dollars in acquiring new merchants as it seeks to capture market share ahead of a possible macroeconomic rebound, a group of analysts including Ken Wong wrote in the note.

"Effective marketing equates with growing merchants which we believe is slightly outpacing (the second quarter)," Wong said. Outperform-rated Shopify's ( SHOP ) gross merchandise volume, which measures the total dollar amount of orders facilitated through Shopify's ( SHOP ) merchants, rose 22% year over year to $67.25 billion in the second quarter.

"Management is not optimizing for near-term take rate with elevated enterprise, (point of sale) and international growth sources of pressure before progressing upwards over time with product attach," according to Wong.

However, Shopify's ( SHOP ) expanded partnership with PayPal ( PYPL ) could offer the former negotiating leverage, according to Oppenheimer. Under the revised deal, PayPal ( PYPL ) will become an additional online card processor for Shopify Payments in the US. PayPal Wallet transactions now factoring into gross payments volume should be additive to take rate and revenue, the analysts said.

Gross payments volume grew to 61% of GMV in the second quarter from 58% in the same period of 2023, Shopify ( SHOP ) reported last month.

Oppenheimer is modeling for adjusted earnings per share of $0.31 in the third quarter, implying growth from $0.24 the year earlier and from the $0.26 Shopify ( SHOP ) reported last quarter. Analysts surveyed by Capital IQ are estimating normalized EPS of $0.27 on average for the ongoing quarter. The brokerage's revenue target marks sequential and year-over-year growth to $2.1 billion, which is in line with consensus views.

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