Is Shopify Stock Overvalued Now?
Kiana Danial | Jul 27, 2020 10:59PM ET
Shopify (NYSE:SHOP) is arguably one of the most hyped assets in the software application category in 2020 with its stock price going from $305 to over $1,000 in only 3 months.
The one-stop-shop for small businesses and e-commerce entrepreneurs offers website creation backed by powerful tools that help businesses find customers, drive sales, and manage day-to-day operations.
With the rumors of Shopify buying out Stamps (NASDAQ:STMP) the volatility has mounted and bear and bulls are going head to head.
Below I breakdown Shopify's fundamentals, technicals, market sentiment, risk assessment,and how this stock could fit into a portfolio. Fundamentals
The Canadian based, Shopify, is the leading platform for small businesses, and it’s supported by the largest number of merchants of any platform. The company could continue to drive strong revenue growth over the medium term thanks to More merchant subscriptions and add-on features like Payments, SFN, and Shipping.
They have been really good with their marketing. Their team has been using search engine optimization, blogs, and network referrals to attract their small business customers. Their scaling will help with margin expansion as well. They’re also expanding with larger businesses, creating customized platforms for those who pay them up to $2,000 per month. This shows they’re prepping to guide their customers up in their value ladder.
Shopify crossed an important milestone of signing up the 1 millionth merchant on its platform in 2019. But fans say that's nothing if you compare it to the 28.8 million small businesses that could eventually move their business to the Shopify platform and exponentially grow its business. Not to mention that worldwide opportunity is massive.
Market Sentiment Analysis
We have analysts ranging from very bearish to very bullish when it comes to the Shopify stock. Each analyst focuses only on points that support their respective views on the Shop stock price. Shopify Bulls Say...
- Shopify’s growth has been strong and is expected to remain so.
- Shopify is simple to use and has a wide variety of built-in features that make it an all-in-one solution.
- The company has many experts to help SMBs with website design, photography, and other elements of the process. It also benefits from a large referral and developer ecosystem.
Get The News You Want
Shopify Bears Say...
- The Canadian company may still fail to live up to optimistic assumptions already priced in the share price.
- Shopify is overexposed to the economic cycle, and retail volume would probably decline in a downturn.
- With COVID-19 many businesses looked to bring their businesses online which helped SHOP. But this trend could end or a competitor could take over.
Technical Analysis
The Shopify stock has found a serious resistance at $1,075 which is the all-time-high level as well. We were expecting the pullback to get the price point to $849 but this week the bulls seem to have regained strength.
*This article was originally published on Invest Diva:
Original Post
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.