Shopify Share Forecast January 2022 – Time to Buy SHOP?
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Shares of Canadian multinational e-commerce company Shopify (NYSE: SHOP) are in the red today, closing at $1221.86 as of January 4th (19:59 EST). The company has transformed itself, now commanding the second-largest share of U.S. e-commerce retail sales. Shopify shares lost 17% of their value from their high in 2021.
Shopify – Technical Analysis
Shopify’s financial statement indicated that the market cap of the company is at $153.466 billion with total assets worth $13.537 billion. Revenue for 2020 was at $2.93 billion with a profit margin of 10.91% compared to $1.58 billion in 2019.
Oscillators for Shopify such as Relative Strength Index (14)(32.11), Stochastic %K (14, 3, 3)(35.59), Commodity Channel Index (20)(−211.11), Average Directional Index (14)(12.88) and Awesome Oscillator(−101.61) are neutral. Moving averages such as Exponential Moving Average (10)(1354.65), Simple Moving Average (10)(1372.40), Exponential Moving Average (20)(1388.77), Simple Moving Average (20)(1388.66) and Exponential Moving Average (30)(1412.57) are indicating a sell action.
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Recent Developments
Shopify has revolutionized the way business does e-commerce in the seven years since it went public. It currently has the 2nd biggest share of U.S. e-commerce retail sales with nearly 9%. Shopify’s revenue increased by 46% in the third quarter to $1.12 billion. This was made up of merchant solutions revenue which gained 51% in the period, expanding to $787.5 million, and subscription solutions, which reached $336.2 million, up 37% year-over-year.
Shopify is continuing its exciting long-term initiative for its fulfilment network. This allows businesses to send their products to warehouses owned by Shopify, which then handles order processing and shipping. As a result, this lets businesses focus on using their limited space for creating more goods, as it reduces the space needed for inventory. The company acquired 6 River Systems for its robotic warehouse technology in 2019. The company is also working on developing international solutions as it deals with different currencies, taxes, languages, and even payment methods. This initiative, called Shopify markets, is currently in the testing phase.
Shopify’s recorded a gross merchandise volume of $400 billion in the third quarter, which has doubled over 16 months. The company’s management is also eyeing a $153 billion opportunity in the SMB space. This is massive compared to the company’s $4.2 billion in trailing-12-month revenue.
Should You Buy SHOP Shares?
Shopify currently has more than 1.7 million businesses worldwide and has expanded its relationship with Alphabet’s Google, Meta Platform’s Facebook, and TikTok in the past year. Its SaaS platform provides custom websites, online marketplaces, and social media platforms for merchants and businesses. Additionally, the company also provides payment processing, discounted shipping, and marketing tools, each of which makes its value proposition more compelling for merchants. It currently powers almost 27% of the world’s e-commerce websites.
Shopify’s business model is disruptive but the shares trade at nearly 280 times forward earnings and 28 times next year’s sales. This can limit the company’s near- to mid-term growth potential while exposing it to inflation-driven sell-offs in the broader market. Shopify’s annual revenue would rise from $2.9 billion in 2020 to more than $40 billion in 2030 if it can maintain revenue growth at 30% CAGR. The company can still generate significant gains even if its valuation cools off along the way. This makes Shopify one of the best companies for long-term investors.
Shopify falls into the category of companies which will leave a lasting impact on the world. It is perfect for investors who have a long-term mindset that can blunt the impact of market volatility. Based on this, now is the perfect time to buy and hold SHOP shares.
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