Shopify stock price falls as the company signals slower growth ahead In 2020, lockdowns were forced upon us. It was a world where many of us were nervous to head outside.
Then, why is Shopify (shop) down today?
Some have found that the growth stock is likely down due to a combination of a tough day in the overall market and another price-target cut on Shopify shares from an analyst.
Why is Shopify’s stock price falling?
Shopify’s stock price has begun its free fall after outperforming for years in a welcomed re-adjusting of valuation and expectations. Shopify (TSX: SHOP) (NYSE: SHOP) stock benefitted greatly from the lockdowns and the shutdowns.
How did Shopify’s stock perform during the pandemic?
Shopify ( TSX: SHOP) (NYSE: SHOP) stock benefitted greatly from the lockdowns and the shutdowns. Its e-commerce platform was already starting to take off. As businesses flocked to the e-commerce facilitator, Shopify’s stock price soared.
What is Shopify’s revenue growth rate?
Shopify’s trailing-12-month revenue is around $4. 2 billion and growing 46% year over year. Its market cap is currently $111 billion. If you’re optimistic about Shopify’s business prospects, you might expect revenue to grow at 30% over the next few years (the percentage growth numbers will come down as the absolute dollar numbers balloon in size).
Should you pay up for Shopify stock?
Historically, paying up for Shopify stock has worked well, given that shares are up over 1,000% in the last five years. However, at the start of this big run-up, Shopify’s price-to-sales ratio (P/S) was only around 15-20, while today it sits at 26. The company is also doing much more in annual revenue now, at $4.
Like many high-growth stocks, Shopify (NYSE: SHOP) has taken a beating over the past three months. Shares are down 42% since late November and are now down almost 25% in the last 12 months. Plenty of smart investors are saying that now is the time to buy the dip on Shopify stock.
If nothing has fundamentally changed with these companies, then the best course of action is likely to hold onto your shares and wait out the volatility.