If you decided to give yourself an early Christmas present last year and buy some Shopify (TSX:SHOP)(NYSE:SHOP) stock, you’re pretty much sitting on the gift that keeps on giving right now.
But, unfortunately, most of us aren’t able to see the future. Perhaps you’re closer to one of the investors on the sidelines wondering when the right time to jump in on this stock is. Or, even more accurately, should you even bother?
One reason you might be considering holding off is the recent news from Facebook that the company will be launching Instagram Checkout through the photo-sharing app. Right now, Shopify provides the option to connect social media pages directly to the e-commerce website. However, with Instagram Checkout, this would no longer be needed for businesses using Instagram to sell products. The news sent shares of Shopify down about $7 per share on March 19, but the stock has since rebounded to the high $260 range. And I mean, that’s nothing given it’s gained about $80 per share since the end of last year.
So, with this news, can Shopify stay afloat forever? Or would it be better to consider another tech company instead?
The case for SHOP
As I mentioned earlier, this stock has grown from about $185 per share to around $270 at the time of writing this article. Those numbers are both exciting and scary. On the one hand, it’s nearing that $300 mark that makes investors think they need to get in before it’s too late. On the other hand, it might be better to wait around for a dip. But will that dip come? And if it does, do you want to already have your hand in this honey jar?
In Shopify’s case, this company seems to innovate almost constantly. The company seems to be leading the charge in the e-commerce space and promises it’s only the beginning.
Analysts used to be on board with that idea, predicting the stock to rise to even $300 per share by the end of 2019. But recently, not so much. Analysts are giving the stock a fair-value price closer to $200, and that’s a huge drop from where it sits now. Yet investors remain excited about this stock, and given its historic performance, it’s no wonder.
The case for KXS
But there are other options for those of us wary about Shopify’s future, and one strong choice for investors looking into the tech sector is Kinaxis (TSX:KXS). This supply-chain management company has gained a reputation for just buying up every company it can to become an operations planning powerhouse, most recently Lenovo at the time of writing this article.
But analysts are split on this company as well. Some are saying it’s overvalued, after the company announced some less-than-stellar earnings over the last few quarters. Others are calling it a steal, predicting the company to rise to the $80- or even $100-per-share range. So, it might be a case of waiting for another dip before investing too heavily in this tech stock as well.
The bottom line
Both stocks have had their fair share of ups and downs, but if I’m going with one stock today, it has to be Shopify. While the stock is on a heavy rise, and I would wait until there is a dip before investing any further, I still think its future outlook is incredibly strong. While it could still have its fair share of dips in the future, over the long term this stock shouldn’t go anywhere but up.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Amy Legate-Wolfe owns shares of Shopify. David Gardner owns shares of Facebook. Tom Gardner owns shares of Facebook and Shopify. The Motley Fool owns shares of Facebook and Shopify. Kinaxis and Shopify are recommendations of Stock Advisor Canada.