Sign InSummary
Shopify's stock is currently showing positive technical indicators, with an ascending trend and potential for growth in the short and long term; however, the negative EPS and lack of profitability should be considered before making an investment decision, with the upcoming earnings release on August 2nd being a significant event to monitor. (July 31, 2023)
Technical Analysis
Shopify Inc. (SHOP) had a closing price of $66.04 on July 28, 2023, with a gain of 3.25% from the previous trading session. The volume of trade stood at 7.78 million, which is less than its average volume of 15.11 million, indicating slightly lower participation in the stock. The stock has been trading within a day's range of $64.87 and $66.26.
The 50-day moving average of SHOP stands at $63.15, and the stock is currently trading above this level, indicating a positive trend in the short term. The 200-day moving average is at $47.27, and the stock is significantly above this level as well, suggesting a bullish sentiment in the long term. The relative strength index for the last 14 days (RSI14) is at 60, which may indicate that the stock is nearing the overbought level and could see some price corrections.
SHOP's MACD line (a three-month trend-following momentum indicator) is at 1.14, which is positive as it indicates upward momentum for the stock.
Fundamental Analysis
Despite robust growth over the year, Shopify displays a negative earnings per share (EPS) of -$1.48. Furthermore, it has a negative price-to-earnings ratio (PE) of -44.62, indicating that the company is not currently profitable.
The company's market capitalization is approximately $84.46 billion, reflecting investor confidence in the stock despite the negative earnings.
The discounted cash flow (DCF) is $67.34, slightly above its last closing price, which suggests the stock might be undervalued.
Shopify's target consensus for the immediate future is $82.08, while the median is $73, which is higher than the last close price. However, the target ranges from a low of $30 to a high of $200, indicating analysts' varied outlooks on Shopify's performance.
Recent News Analysis
News concerning Shopify indicates that the company stands to benefit from continuing growth in e-commerce. Upgrades from analysts and continuing bullish notes are creating positive sentiment around the stock.
Future Prediction
According to the given data, Shopify's stock could potentially continue its ascending trend during the next trading day on July 31, 2023. It is currently trending above both its 50 and 200-day moving averages, the MACD is positive, and the DCF suggests some undervaluation - all bullish signals.
For the upcoming week, Shopify could test its consensus target of $82.08, backed by positive news sentiment and strong growth in e-commerce. However, due to nearing an overbought level indicated by an RSI of 60, a minor price correction could be imminent before the stock continues its climb.
Evaluation and Recommendation
Despite a negative EPS, Shopify's stock technicals and fundamental aspects demonstrate significant potential for growth, with ample investor confidence reflected in its large market cap and positive near and median term outlook. Therefore, it could be considered a 'Hold' to 'Buy', but investors should keep in mind risks due to overbought indicators and lack of current profitability.
However, Shopify's release of earnings on August 2, 2023, should be closely watched, as it could impact the stock's movement and future outlook significantly. Investors are advised to regularly review relevant news and updates before making any investment decision.
