Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Shopify (SHOP) Shares Skyrocket, What You Need To Know

Published 2024-05-22, 03:39 p/m
Shopify (SHOP) Shares Skyrocket, What You Need To Know
SHOP
-

Stock Story -

What Happened: Shares of e-commerce software platform Shopify (NYSE:TSX:SHOP) jumped 5.4% in the morning session after Goldman Sachs (NYSE:GS) analyst upgraded the stock's rating from Neutral to Buy and raised the price target from $64 to $74. The new price target represents a 25% premium from where shares traded when the upgrade was announced. The analyst added, "Given Shopify's significant technology moat in eCommerce software and share gain across eCommerce cycles, we believe these investments will drive more durable revenue growth at scale." After the initial pop the shares cooled down to $58.64, up 2.8% from previous close.

Is now the time to buy Shopify? Find out by reading the original article on StockStory, it's free.

What is the market telling us: Shopify's shares are very volatile and over the last year have had 18 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 14 days ago, when the stock dropped 19.9% on the news that the company reported first-quarter results and provided revenue guidance for Q2, which implied a growth deceleration. In Q2'2024, Shopify expects revenue to grow at high-teens percentage rate on a year-over-year basis. This is a significant decline compared to the low-twenties percentage growth recorded in Q1. On a more positive note, GMV (gross merchandise value) and revenue both came in narrowly ahead of analysts' estimates during the quarter. It's noteworthy that the magnitude of these beats was smaller and less convincing than previous quarters. EPS did beat by a more convincing margin. Gross margin improved while the business continued to generate positive cash flow. Overall, it was a mixed quarter for the company, with the market likely worried about the weaker growth forecast for a company trading at a fairly lofty valuation.

Shopify is down 20.7% since the beginning of the year, and at $58.64 per share it is trading 35.4% below its 52-week high of $90.72 from February 2024. Investors who bought $1,000 worth of Shopify's shares 5 years ago would now be looking at an investment worth $2,099.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.