Shopify Inc. (SHOP, Financial) stock was down 0.96% on Tuesday. The stock rose late last week following the company's announcement of a new wireless card reader. The device will allow the reader to remain on its base or be removed so merchants can also use the reader on the go.
The reader will attach to the base with a micro-USB cord and offers a battery that allows the reader to work for one week without needing to be recharged.
The company plans to offer additional accessories for the reader in the future.
Shopify plans to offer its new reader for free to all merchants with the company's former point-of-sale solutions. The new reader will cost $29 for anyone that purchases the reader without owning a former solution. The company will charge a transaction fee of 2.4%.
The company plans to release the card reader to the public in June with a free 14-day trial.
Consumers can pre-order the reader today. The device can connect to Android and iOS devices through Bluetooth.
The company's reader will accept traditional swipe and chip cards. Shopify's payment system supports Apple Pay and other technologies. Apple Inc. (AAPL, Financial) will compete directly with Shopify via the company's iPhone credit card reader.
The company's new credit card reader is a complete in-house design that works to move Shopify's offerings further to in-person payments. The company has offered mobile readers since 2013 and maintains a user base of 400,000 merchants.
Shopify's reader will be in direct competition with Square Inc. (SQ, Financial). Square offers mobile card readers and services to millions of users. Shopify remains a smaller competitor to Square, having nearly a third of the processed merchandise volume last year.
Shopify's monthly fee adds to the company's complexity. Other companies like Square do not have monthly fees but charge slightly higher transaction fees and base costs.
The company's reader will accept American Express, MasterCard and Visa cards, among others.
Shopify plans to release the company's first-quarter 2017 results on May 2. The company will hold its conference call on the same day at 8:30 a.m. EST.
Shopify's performance in fourth-quarter 2016 impressed investors, noting an 86% year-over-year growth in the final quarter of the year. The company's total revenue for the quarter reached $130.4 million with subscriptions accounting for $56.4 million, marking a 63% growth in the unit.
The company's gross profit also rose to $68.1 million with a growth of 87% on the year.
The company's fourth-quarter operating loss came in at $9.3 million, or 7% of the company's revenue. The company suffered a net loss of $8.9 million last quarter. The initial hit from the production of the new chip and card reader is expected to have an impact on Shopify's profit in 2017.
The company's new merchants grew by 133,000 in 2016.
Financial Times reports that 26 analysts expect the company to outperform the market. Analysts forecast the company to post EPS of -10 cents on $121.6 million in sales.
Disclosure: Author does own any stake in the listed equities.
