Will A Split Help Reverse Shopify Stock’s Decline?

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Shopify Stock (NYSE:SHOP) has had a rough year so far, down nearly 75% since early January as growth in demand for the company’s e-commerce software slows, while investors also hit high-multiple stocks amid rising interest rates. exit from. For perspective, over Q1 2022, Shopify’s revenue grew nearly 22% year-over-year to $1.2 billion, marking the slowest growth rate since the company went public, as people increasingly grew physical. Back to the shops. In addition, despite slowing growth, Shopify is doubling down on the expansion of its fulfillment network through investments in infrastructure and the planned acquisition of technology provider Deliver. Investment plans have not been good for investors for two reasons. First there are concerns about whether Shopify can really compete with AmazonAMZN
, which has a deep fulfillment and logistics network. Moreover, timing of investment is also a concern, as the market is increasingly prioritizing cash flows and margins amid rising inflation and rising interest rates. Separately, Shopify’s founder’s recent move to issue a new class of shares, which would strengthen CEO Toby Lutke’s control over the e-commerce company, could also create an overhang on the stock.

While there are clearly some downsides for Shopify, we believe the stock looks pretty attractive at current levels. The stock is down nearly 80% from its all-time high and now trades at levels seen in 2019 before the Covid-19 pandemic. Stock is currently 20x . trades at more than 6x of projected 2022 revenueZRX
Viewed up to 40x between 2019 and 2021. However, Shopify has really made great strides since then. For perspective, its customer base has grown 2 times from pre-pandemic levels and had a gross merchandise value of a little over $175 billion for 2021, making it nearly half of Amazon’s market share. Plus, it’s not like Shopify will stop growing. Consensus estimates point to revenue growth of about 25% this year. Shopify is also set to split its stock 10-for-1 starting June 28, and it could also be a sign that the company is confident about its future prospects. Despite near-term constraints, the shift toward e-commerce is likely to be a largely secular trend, and we think Shopify will continue to be a major beneficiary of this growth, as it expands into product suites for software and analytics tools. provides. Businesses that want to go online without having to bank on a platform player like Amazon.

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We value Shopify stock at approximately $600 per share, which is approximately 70% ahead of current market value. See Shopify Valuations: Is the stock of the shop expensive or cheap? For more information about Shopify’s ratings and Shopify Revenue For more information on the company’s revenue streams and how they trend.

Stock prices across sectors have fallen sharply in recent months and we are now in a bear market for the first time since March 2020, when the COVID-19 outbreak triggered a market crash. We capture key trends in the Dow during and after major market crashes in our interactive dashboard analysis.market crash comparison,

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