E-Commerce Giants Gear Up for Holiday Quarter with Shopify Leading the Charge

The holiday quarter is just around the corner, and for e-commerce companies like Shopify (SHOP), Amazon (AMZN), and MercadoLibre (MELI), it's a crucial period that accounts for a significant portion of their annual revenue. Specifically, Shopify earns 43% of its operating income in the fourth quarter, making it the company's most profitable quarter by a wide margin.

The e-commerce giant Amazon also experiences a seasonal lift during this time, but its profit engine is increasingly driven by its cloud computing business, Amazon Web Services, which doesn't rely on the shopping calendar. In contrast, MercadoLibre spends heavily on free shipping, marketing, and credit cards to capture holiday shoppers, with revenue growing 50% year over year in the second quarter.

Shopify's stock has pulled back sharply from its 52-week high of $182 to around $130 as of this writing, but it still trades at a steep price-to-earnings multiple of about 53 times its expected earnings for next year. On the other hand, Amazon shares trade near $248 and MercadoLibre's stock trades at around 33 times its expected profit.