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Shopify (TSE:SHOP) Lands New Record, Shares Slump Anyway
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Shopify (TSE:SHOP) Lands New Record, Shares Slump Anyway

Story Highlights

Shopify had a killer weekend, but analyst concerns about too much optimism drive shares lower.

It was a huge weekend of shopping for much of the United States and beyond this weekend, and already, we’ve heard from several quarters about just how good it turned out to be. One more such corner, Shopify (TSE:SHOP) (NYSE:SHOP), pulled in its own big win: a record-breaking season. But that wasn’t enough for investors, who sent Shopify shares down fractionally in Tuesday afternoon’s trading.

Shopify merchants pulled in a combined total of $9.3 billion. Not only is that a record, but that’s also 24% better than what was brought in this time last year. The peak of the season for Shopify merchants turned out to be 12:01 p.m. on Black Friday itself, as shoppers plunked down a whopping $4.2 million per minute at its various retailers. As for categories, health and beauty was one of the big winners, joined by home and garden selections and apparel and accessories vendors. Interestingly, just over 17,500 vendors actually made their first sale ever during the shopping frenzy in question.

Piper Sandler Downgrades Shopify

The numbers are enough to stagger any reasonable imagination, but there are some who question whether this type of success is sustainable after the shopping frenzy has concluded. Piper Sandler, via analyst Clarke Jefferies, dialed down the appraisal from Neutral to Underweight and also lowered the price target from $58 to $56 per share. Why? Simply put, Shopify is expecting too much. Jefferies pointed out that macro factors and Shopify’s overall execution have little to do with the matter. What he noted, however, was that “…growth and profit assumptions embedded in shares today are too aggressive based on our market understanding.”

Is Shopify a Buy, Sell, or Hold?

Turning to Wall Street, analysts have a Moderate Buy consensus rating on SHOP stock based on 11 Buys, 17 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 97.82% rally in its share price over the past year, the average SHOP price target of $68.02 per share implies 7.62% downside risk.

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