Why is Shopify (SHOP) stock falling while the market is rising? Find out what you need to know!

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Why the action of Shopify (SHOP) Does it fall while the market rises? Find out what you need to know!
  • Underperforming sales: Shopify reported lower-than-expected quarterly results, sending the stock lower.
  • Increased competition: Competition in the e-commerce sector is intensifying, which is weighing on Shopify’s valuation.
  • Market readjustment: Investors are constantly reevaluating companies’ growth prospects and thus can influence Shopify’s stock price.

It’s sometimes surprising to see a stock price fall when the market as a whole seems to be moving forward. This is particularly the case for Shopify’s stock (SHOP), which is experiencing downward fluctuations, thus raising questions among investors. To understand the reasons for this trend, it is essential to take a closer look at the factors that influence this stock price. Find out in this article what you need to know to better understand this situation on the financial market.

Shopify Stock Performance Compared to the Market

Shopify (SHOP) closed the recent trading session at $66.13, marking a 1.8% decline from the previous day’s closing price. Meanwhile, the S&P 500 index posted a daily gain of 0.07%, while the Dow lost 0.13% and the tech-heavy Nasdaq added 0.14%.

Comparison of Sector Performances

Over the previous month, Shopify shares were up 6.87%. However, this performance remains lower than that of the information technology sector, which saw an increase of 8.61%, and despite everything, it outperforms that of the S&P 500 which is 4.34%.

Analysts’ Expectations for Upcoming Results

The investment community is closely watching Shopify’s future earnings reports. Analysts forecast earnings of $0.21 per share, marking annual growth of 50%. Consensus estimates project revenue of $2 billion, up 18.15% from the previous quarter.

To read Shopify on the rise: How to take advantage of it to boost your online sales?

Estimated Profits and Annual Turnovers

For the full year, Zacks Consensus Estimates are projecting earnings of $0.99 per share and revenue of $8.51 billion, reflecting changes of +33.78% and +20.48%, respectively. to the previous year.

Recent Revisions to Analyst Estimates

It’s crucial for investors to note recent estimate revisions for Shopify. These revisions tend to reflect the latest short-term business trends. Positive estimate revisions are often a sign of optimism about the company’s business outlook.

Zacks Index and Valuation

Currently, Shopify holds a Zacks Rank of #3 (Hold). Zacks’ proprietary Ranking model takes these estimate changes into account and provides an actionable rating system. A Zacks Rank #1 (Strong Buy) has produced an average annual return of +25% since 1988.

Price/Earnings Ratio and PEG

On the valuation front, Shopify has a forward-looking price-to-earnings (P/E) ratio of 68.1, which represents a premium to the industry average of 23.56. It is also relevant to note that Shopify is currently trading with a PEG ratio of 2.1, in line with the industry average of 2.13.

Zacks Industry Rank

The Internet Services industry, which Shopify belongs to, currently ranks #149 out of 250+ industries in the Zacks Rank, placing this industry in the bottom 41%.

Performance Comparison

Indicator Shopify Performance Market/Reference Index
Close Recent ($) 66.13
Daily Change (%) -1.8 S&P 500: +0.07%
Performance over 1 Month (%) +6.87 Tech sector: +8.61%
Expected Earnings per Share (eps) 0.21
Annual EPS Growth (%) +50
Expected Income ($) 2 billion
Forward P/E Ratio 68.1 Industry: 23.56
PEG ratio 2.1 Industry: 2.13

Factors Affecting Stock Performance

  • Analyst Estimates: Positive recent revisions, but cautious projections.
  • Price/Earnings Ratio: High P/E of 68.1 versus 23.56 for the industry.
  • Sector Trends: Performance below the IT sector despite progress.
  • Market Context: S&P 500 and Nasdaq up, conflict with Shopify’s decline.
  • Zacks Rating: Held at a Zacks Rank of #3 (Hold), reflecting balanced performance.

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