Shopify Share Price Forecast March 2022 – Time to Buy SHOP?
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Shares of Canadian multinational e-commerce company Shopify (NYSE: SHOP) are in the green today, after closing at $587.65 as of March 9th (19:59 EST). Shopify shares have rebounded after the company’s share price tumbled earlier in the week.
Shopify – Technical Analysis
Shopify’s financial statement indicates that the market cap of the company is at $74.015 billion with total assets worth $13.34 billion. Revenue for 2021 was at $4.61 billion with a profit margin of 63.20% compared to $2.29 billion in 2020.
Oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(29.97), Williams Percent Range (14)(−65.41), Bull Bear Power(−152.65) and Ultimate Oscillator (7, 14, 28)(38.10) are neutral. Moving averages such as Simple Moving Average (10)(627.35), Exponential Moving Average (20)(691.31), Simple Moving Average (20)(699.96), Exponential Moving Average (30)(762.40) and Simple Moving Average (30)( 760.69) is indicating a sell action.
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Recent Developments
Shopify acquired an 8% stake in Affirm, worth $2 billion via an IPO held on January 13th 2021. It acquired Primer, an AR app on the App Store that allows users to preview home improvement items digitally in June 2021.
Shopify released its fourth-quarter results on February 16th which indicated that sales from its merchant solution sales increased 47% year on year, compared to a total sales increase of 41% to $1.3 billion overall. Other positive metrics include gross merchandise volume increasing by 31% to reach $54 billion. However, Shopify shares fell despite the company delivering these solid results. Investors have two major reasons to have a less than favourable outlook on the company. Some believe that tech stocks have suffered over the past several months, while others contend that PayPal will not be able to keep up its pace of growth.
Shopify president Harley Finkelstein also called attention to Shopify’s NFT tech on the fourth-quarter 2021 earnings call. The company’s current NFT program is in the beta stage and only available to all U.S.-based Shopify Plus customers who subscribe to the $2,000-per-month service spanning all parts of online business management. The company has a good track record of fostering new e-commerce ventures on behalf of its users.
Many investors feel that Shopify’s revenue growth rate this time around was on the lower end. However, the lower numbers are due to tough comparables with last year. Shopify’s revenue soared during the pandemic, as more people turned to e-commerce options. Merchants flocked to Shopify’s platform to open online storefronts. As a result, the company faced difficult year-over-year comparisons.
Should You Buy SHOP Shares?
Shopify takes advantage of high switching costs for merchants. Merchants are unlikely to jump ship to any of their competitors as it takes a considerable amount of time and effort to build an attractive online storefront from scratch. This also results in business disruption and the loss of customers. While the bulk of its customers is likely to remain with the company, there is still room for growth.
Shopify continues to post good financial results and is continuing to successfully tap into the e-commerce market. It has amassed twice the number of merchants using its platform than it did in 2019. It has also doubled its GMV and tripled its revenue in the past two years. Thus it could be a great time to pick up Shopify shares at the moment if investors can look past the short-term volatility that the broader market has experienced over the past few months.
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