How to Trade Shopify Stock After Q1 Performance
Shopify’s proprietary e-commerce platform is used by many multinational companies around the world as an online store and point of sales system. After its IPO in 2015, the stock price surged more than 5,000% to a record high in 2021.
However, the stock crashed more than 85% by October 2022. Since then, the stock is up more than 160%, and has just reported fiscal first-quarter results for 2023.
Learn more about the earnings report and what analysts are forecasting for the stock below.
|Symbol for Invest.MT5 Account:||SHOP|
|Date of Idea:||9 May 2023|
|Time Line:||1 - 6 months|
|Position Size for Invest.MT5 Account:||Max 5%|
- The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.
All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing.
Shopify Q1 2023 Performance Breakdown
Here are some of the key highlights from the latest fiscal first-quarter earnings report from Shopify:
- Excluding items, earnings of 1 cent per share vs expected loss of 4 cents per share
- Revenue was up 25% from a year earlier to $1.51 billion vs $1.43 billion expected
- Gross merchandise volume increased 15% to $49.6 billion from last quarter
- Cutting 20% of the workforce
- Selling multiple divisions to focus on core business
One of the major surprises in Shopify’s latest earnings report is the announcement it is cutting 20% of its workforce. CEO Tobi Lütke informed its employees by posting a memo on the company’s website of the job cuts. However, there were no details on which divisions would be affected.
While unfortunate, investors tend to like companies streamlining their operations to try and boost the bottom line. Last year July, the CEO also announced a 10% cut in its workforce stating they had misjudged how long the pandemic-led e-commerce boom would last.
On top of the job cuts, Shopify announced plans to offload multiple businesses and assets to try and focus on its core business which is providing a platform and tools to sell products online. It is selling 6 River Systems the warehouse robot maker and the logistics unit Flexport – although no details have been provided.
The stock price rallied on the earnings report and is now up 85% on the year – at the time of writing. However, while Shopify is now focusing its efforts on its e-commerce business and offloading other side businesses, it will now be much more dependent on the health of the consumer.
If there is a slowdown in the economy, then there will be less sales from the websites of Shopify’s clients which could lead to cutting back on subscriptions and payments growth. Therefore, tracking the global economic environment will be important to analysing the health of the consumer and Shopify’s future performance.
Shopify Stock Forecast - What do the Analysts Say?
According to analysts polled by TipRanks for a Shopify stock forecast in the past 3 months, there are currently 12 buy, 21 hold and 0 sell ratings on the stock. The highest price level for a Shopify stock forecast is $80.00 with the lowest price target at $44.00.
The average price target for a Shopify stock forecast is $60.03.
An Example Trading Idea for the Shopify Stock Price
An example trading idea for the Shopify share price could be as follows:
- Buy the stock on a break above $64.00 to allow for current volatility.
- Target just below the highest analyst price target of $80.00.
- Keep your risk small at a maximum of 5% of your total account.
- Time Line = 1 – 6 months
- If you buy 10 Shopify shares:
- If target is reached = $160.00 potential profit ($80.00 - $64.00 * 10 shares).
Remember that markets go up and down and it is unlikely the share price will move up in a straight line. In fact, it may even go much further down before it rises, especially considering how uncertain the economic environment is.
Be sure to exercise good risk management and always know how much you could potentially lose on a trade and the risks involved, as well as the costs.
With the Admirals Invest.MT5 account you can buy and sell US stocks with a commission from $0.02 per share. This means buying 10 shares in Shopify stock would result in a commission of $0.20 ($0.02 * 10 shares) for executing a per-side transaction.
There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall!
How to Buy Shopify Stock in 4 Steps
With Admirals, you can buy shares in companies like Shopify with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks.
- Open an account with Admirals to access the Trader’s Room.
- Click on Trade on one of your live or demo accounts to open the web platform.
- Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.
- Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.
Click on the banner below to trade Shopify stock today! ▼▼▼
Do You See the Shopify Stock Price Moving Differently?
Remember that all analytics and trading ideas are based on the personal view and experience of the author.
If you believe there is a higher chance Shopify's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.
The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.
This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article.
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