Shopify stock price has suffered a sharp reversal this year, moving from a high of $182 in October last year to the current $118. This article explores what to expect as the company prepares to publish its financial results on Wednesday this week.
Shopify to publish its financial results this week
SHOP stock price has crashed sharply in the past few months, in line with our last Shopify forecast. The decline also coincided with that of other software stocks, including popular names like ServiceNow, Intuit, and Workday.
It will be in the spotlight this week as it releases its financial results, which will provide more color on its business and the impact of the ongoing artificial intelligence (AI) transformation.
The most recent results showed that Shopify’s growth continued in the third quarter as demand for its product accelerated. Its report showed that its Gross Merchandise Volume (GMV) jumped to over $92 billion from the $69 billion it made in the same period in 2024.
Shopify continued to convert its GMV to revenue, with its quarterly figure rising from $2.1 billion to over $2.84 billion. Its operating income rose to $343 million, while its free cash flow jumped to $507 million.
Wall Street analysts are optimistic that the company’s growth continued in the fourth quarter. The estimate is that the revenue rose by 15% in the fourth quarter to over $3.59 billion.
If this estimate is accurate, the annual revenue will be $11.47 billion, up by 15% YoY. Also, analysts expect that its revenue will move to over $14.2 billion in the coming financial year.
Wall Street analysts are upbeat about its future, with Moffett Nathanson boosting the rating from neutral to buy. Royal Bank of Canada and Scotiabank analysts expect that the stock will jump to $200, while Wells Fargo and Bank of America see it rising to $198.
The average estimate among analysts is that the Shopify stock price will jump to $170, up by 43% from the current level.
A major risk that Shopify stock has always faced is that its valuation has always been stretched because of the moat in its business. Data shows that the company has a forward price-to-earnings (PE) ratio of 77, much higher than the sector median of 23.
Similarly, its forward PEG ratio is 1.85, also higher than the sector median of 1.52. The forward EV to EBITDA ratio is 71, higher than the sector median of 14.
Shopify stock price technical analysis
The weekly timeframe chart shows that the SHOP stock price has crashed into a bear market this year. It has slumped from the all-time high of $182 to the current $120.
A closer look shows that the stock bottomed at the 100-week Exponential Moving Average (EMA). It is hovering at the 38.2%Fibonacci Retracement level at $121.
The stock has also formed a cup-and-handle pattern, which is a common bullish continuation sign in technical analysis.
Therefore, the most likely scenario is where the stock rebounds after earnings. If this happens, It will rally to 23.6% Fibonacci Retracement level at $145. However, a drop below the year-to-date low of $110 will invalidate the bullish outlook.
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