With expectations of a moderation in topline expansion and weaker profitability in 2022, it is hard to expect a major rebound in Shopify’s shares this year. But a further fall in Shopify’s stock price is also unlikely given its recent valuation de-rating (which has factored in most of these headwinds) and long-term growth potential.
Shopify stock tumbled on Wednesday after the e-commerce software company reported fourth-quarter earnings that narrowly beat expectations, but cautioned about revenue headwinds in the first half of 2022.
Why is shopify stock falling?
Shopify stock price falls as the company signals slower growth ahead In 2020, lockdowns were forced upon us. It was a world where many of us were nervous to head outside.
Shopify (TSX: SHOP) (NYSE: SHOP) stock benefitted greatly from the lockdowns and the shutdowns. Its e-commerce platform was already starting to take off. As businesses flocked to the e-commerce facilitator, Shopify’s stock price soared.
Shares closed the day down 16%. For the fourth quarter, Shopify posted revenue of $1.38 billion, which surpassed estimates of $1.34 billion.
Will profits take a hit from Shopify’s profits in 2021?
Profits will likely take a hit for multiple reasons. First, Shopify expects merchant solutions to grow at more than twice the rate of subscription solutions. Subscription solutions growth, which is tied to growth in the customer count, was just 26% in the fourth quarter of 2021.
Shopify stock should remain under pressure as NASDAQ 100 futures sink 2.5% on Tuesday. Support for the ecommerce company shares is now at $594. Shopify (SHOP) has surprised investors with how far it has fallen. The market correction that began in November 2021 has led SHOP stock to drop 63% from its all-time high.
Moreover, are stocks like Shopify undervalued?
They’re arguably overvalued (at least in the short term ) and due for a correction.
Is Shopify a risk-on growth stock?
Brent oil is nearing $100. Less immediately, the twin obstacles of higher interest rates and increasing capex has concerned SHOP shareholders.
How did Shopify’s (shop) Q4 earnings beat Wall Street estimates?
For the fourth quarter, Shopify posted revenue of $1.38 billion, which surpassed estimates of $1.34 billion. Adjusted earnings per share were $1.36, beating Wall Street’s expectations of $1.27 per share.