The growth stock is likely down due to a combination of a tough day in the overall market and another price-target cut on Shopify shares from an analyst.
While writing we ran into the query “Why is shopify stock going down?”.
As the leader of the tech sector, September’s tech sell-off (which was more pronounced in the U. S. than in Canada) caused Shopify to suffer the most significant drop in valuation. When the stock took off after the market crash, it grew rapidly, and in a matter of months, it was trading in four digits instead of three.
Here is what our research found. shopify became one of the biggest winners of the pandemic-fueled shift to e-commerce. The company’s stock price surged in 2020 on the back of that momentum.
Should you pay up for Shopify stock?
Historically, paying up for Shopify stock has worked well, given that shares are up over 1,000% in the last five years. However, at the start of this big run-up, Shopify’s price-to-sales ratio (P/S) was only around 15-20, while today it sits at 26. The company is also doing much more in annual revenue now, at $4.
The next thing we asked ourselves was: is it time to buy the dip on Shopify stock?
Like many high-growth stocks, Shopify (NYSE: SHOP) has taken a beating over the past three months. Shares are down 42% since late November and are now down almost 25% in the last 12 months. Plenty of smart investors are saying that now is the time to buy the dip on Shopify stock.
Shopify (TSX: SHOP) (NYSE: SHOP) has the distinction of being the only tech stock among the 10-largest securities (based on market cap) currently trading on the TSX. The difference between the total market capitalization of the second-largest tech stock, Constellation Software, is over $80.5 billion.
What is Shopify’s revenue growth rate?
Shopify’s trailing-12-month revenue is around $4. 2 billion and growing 46% year over year. Its market cap is currently $111 billion. If you’re optimistic about Shopify’s business prospects, you might expect revenue to grow at 30% over the next few years (the percentage growth numbers will come down as the absolute dollar numbers balloon in size).