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SHOP STOCK: BUY, SELL, OR HOLD?

By August 29, 2023116 views
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We’re now past the halfway mark of 2023, and most investors have an idea as to
which sectors may be worth sticking with through the remainder of the year.
However, one sector that continues to garner interest from growth investors
remains e-commerce stocks. Companies like Shopify (TSX:SHOP) have performed
very well on a year-to-date basis, blowing away many investors’ expectations,
given how rough 2022 was.



Let’s dive into whether Shopify represents a buy, sell or hold at this point in
the cycle. Indeed, it’s difficult to discern whether SHOP stock is on the
uptrend amid a fresh bull market rally or if this is just a pop before another
leg lower ahead of a potential recession.


WHAT DO SHOPIFY€™S Q2 RESULTS SUGGEST? 

In order to look forward to what the future has in store for SHOP stock,
sometimes it’s best to look at how the company has performed in the past.
Shopify recently declared its second-quarter (Q2) results, and analysts are not
cheery about the company following its earnings, given the fact that Shopify
missed on the bottom line, reporting a loss per share of roughly -$0.14,
compared to expected earnings per share of $0.06.

These results were doubly disappointing, considering Shopify has been focused on
cutting costs over the past two quarters. These efforts have borne fruit.
However, it’s clear that Shopify has more work to do to bring costs in line with
the market’s expectations. The fact that Shopify lost US$1.3 billion while
cutting 20% of its workforce doesn’t signal that its cost control efforts are
effective, at least not yet.

That said, with revenue still trending higher, and the company continuing to
prove it can grow through periods of uncertainty, there is plenty to like about
Shopify’s prospects moving forward. Right now, the outlook for this company is
about as murky as it gets. But for those who have followed Shopify for any
period of time, it’s these periods of uncertainty that have proven to be the
best buying opportunities for this long-term growth gem.


BOTTOM LINE

Shopify has always been focused on integrating advancements in technology into
their business. As their latest upgrade, they have now implemented Google Cloud
AI (artificial intelligence). Merchants can now advance search and browse
experiences utilizing Google Cloud’s Discovery AI solution. Some of the unique
features include AI-powered browsing, AI-driven personalization capability, AI
recommendations, advanced privacy and security, and Google Cloud Retail
Search. 

Should these growth initiatives translate into both revenue and
earnings-per-share growth, there’s plenty of upside potential on the horizon for
SHOP stock. Investors want to see profitable growth, and that remains the key
question for the company right now. In my view, I think SHOP stock remains a
hold for now but a long-term buy, and I’d be interested in this stock on any
major dips moving forward.

The post SHOP Stock: Buy, Sell, or Hold? appeared first on The Motley Fool
Canada.


SHOULD YOU INVEST $1,000 IN SHOPIFY?

Before you consider Shopify, you’ll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best
stocks for investors to buy in August 2023… and Shopify wasn’t on the list.

The online investing service they’ve run for nearly a decade, Motley Fool Stock
Advisor Canada, is beating the TSX by 26 percentage points. And right now, they
think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 8/16/23

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More reading

3 Top Growth Stocks I’d Buy Right Now Without Any Hesitation
Proceed With Caution When Considering These 5 Ultra-Popular Stocks
Before You Buy Shopify Stock: Here’s a Value Stock I’d Buy First
A Bull Market Could Be Coming: 3 Reasons to Buy 3 Stocks
3 High-Growth Stocks That Could 10X in 10 Years — or Sooner

Fool contributor Chris MacDonald has no position in any of the stocks mentioned.
The Motley Fool has positions in and recommends Shopify. The Motley Fool has a
disclosure policy.

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