Its time to update the thesis on a well know eCommerce giant. Here is the breakdown of $SHOP, otherwise known as Shopify.
Current Price: $937.5972
52/Wk High: $1,146.91
52/Wk Low: $282.08
Read below for the breakdown!
$SHOP is an online platform in which provides the tools for virtually anyone to create, run, and operate an online retail business.
Shopify has been popular for years and growing with the common online growth trends, but COVID-19 has put the company into a more exponential growth position.
Recently though, the stock dipped significantly due to a secondary offering, pricing shares at $900 with a quantity of 1.1 million shares.
Reasonably, the stock was correct to drop on the offering, given the dilution of shares, which is never favorable for shareholders.
The company reported stellar earnings and growth statistics. During the Q2 earnings report, Shopify noted that it saw a huge 71% increase in new stores created and a whopping 119% Q2 YOY increase in gross merchandise volume.
Digging into the numbers Shopify reported a massive beat. The company reported a Q2 EPS of $1.05 compared to the expected $1.04 EPS consensus. Not only that but revenue came in at $714.3 million, representing a YOY increase of 97%.
Not only were earnings stellar but the balance sheet continued to hold strong. Remarkably, Shopify reported no debt on the balance sheet once again, along with a cash on hand position of $4.001 billion as of June 30th.
Given the excellent numbers and the boost in the digital transformation, the analysts have been and are bullish on $SHOP. Currently, the mean price target sits at $1,110/share, representing a 17.52% upside.
Furthermore, the high price target is $1,400/share, representing a 48.52% gain, and the low price target is $850.00/share, representing a -9.99% loss.
The big money is just as bullish as the analysts as well. Currently, 66.56% of $SHOP is owned by institutions. Top holders include Baillie Gifford & Co., Capital World Investors, and Morgan Stanley Investment Management.
When taking a look at the Shopify’s fundamental multiples, the stock does currently trade at overvalued levels. Currently, $SHOP trades at a price to sales ratio of 55.10 and a price to book value of 24.76.
Taking a look at the charts, Shopify could be flashing an opportunity. Currently, the six-month RSI sits at an even 46.46. Secondly, the six-month MACD sits around -22.50 and looks to be converging back to the upside on a momentum basis.
When it comes to the moving averages, the stock is currently attempting to break back up through its 50-day moving averages, a breakthrough could mean more upside to come, while a rejection could send the stock lower.
Finally, the six-month CCI sits at a low -35.39, and Shopify stock trades a whopping 210.04 points off its highs.
In general, Shopify stock is very volatile but if you are looking for a long term buying opportunity on $SHOP, right now isn’t a bad time.
On the otherhand, in the short term, I expect high volatility, large price fluctuations, and uncertainty to run the stock.
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Disclaimer: This is not direct financial advice, simply opinion based on independent research.