Shopify (SHOP) has inked a strategic partnership with Chinese internet giant JD.com Inc. (JD) to simplify and enhance cross-border e-commerce. The two are coming together to make it easy for independent brands in the U.S. to access consumers in China.
Shopify operates a cloud-based commerce platform for small and medium-sized businesses. Merchants use its software to run businesses across various sales channels. The SHOP earnings report for Q4 2021 is scheduled for February 16, 2022. SHOP shares fell 4.37% to close at $1054.66 on January 18.
Shopify-JD Partnership
Merchants on the Shopify ecosystem will be able to leverage JD.com’s quality supplier network to enhance their business. The merchants stand to gain access to over 550 million JD.com’s customers in China. In return, this deal will allow consumers in China to access authentic and quality products.
Additionally, JD intends to open a channel for the listing of products on Shopify through JD Worldwide. The channel is also expected to shorten the period international brands take to begin selling products in China, to 3 to 4 weeks.
Shopify and its strategic partner are also committed to simplifying access and compliance for Chinese brands and merchants looking to venture into the Western markets.
Stock Rating
Last week, Loop Capital Markets analyst Anthony Chukumba reiterated a Hold rating on Shopify stock and lowered the price target to $1,300 from $1,600. The analyst ratings imply 23.26% upside potential to current levels. The cut comes on the analyst conducting a survey of 500 current merchants that signaled respondents selling across fewer channels and utilizing fewer merchant solutions. At the same time, the survey showed improved perception of Shopify’s value.
While the analyst has stuck to his Q4 earnings estimates amid the tepid sales, the reduced price target reflects the impact of expected interest rate hikes.
Consensus among analysts is a Moderate Buy based on 13 Buys and 8 Holds. The average Shopify price target of $1623.86 implies 53.97% upside potential to current levels.
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