Shopify (TSX:SHOP): Will the C-Suite Exodus Cause a Dip?

Shopify stock is following the pattern of the tech sector as a whole and has come down a long way from its yearly peak. Three members of the senior management leaving might cause a dip.

| More on:
Hand holding smart phone with online shop concept on screen

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Change is an inevitable part of growth. This is as true for corporations as it is for individuals. But the problem with many of the changes in an organization, especially when it comes to major management changes that are made public, is that it goes beyond the scope of the organization itself. Its impact is often reflected in the investor sentiment as well.

It’s not always the case, but a major change in leadership of a company is likely to make the stakeholders a bit restless. And since investors are one of the stakeholder entities, they might see it as a dangerous sign. Some might even start to consider exiting their position, end even though it rarely happens, a rapid shift in investor sentiment can snowball into a lot of significant exits, causing the stock to dip.

But it’s unlikely that we will see the phenomenon with Shopify (TSX:SHOP)(NYSE:SHOP).

Shopify leadership changes

Shopify management team is about to become three-member short. The leading tech giant of the country is about to lose its chief technology officer, chief talent officer, and chief legal officer. The news broke via an online memo. Shopify hasn’t made any announcement as to who would be taking those positions.

The company might decide to merge some vacant positions with the existing ones, and other C-Suite Executives might assume additional responsibilities. The company hasn’t mentioned why three top-level executives suddenly decided that they needed a career change and said that all three had their reasons.

Shopify stock

The stock has taken a minor dip since the news broke; nothing more than usual. The stock was already in a slump, along with the rest of the tech sector. It’s currently trading at an 18% “discount” from its recent peak, though it didn’t have much impact on the company’s valuation, and it’s still aggressively overpriced.

Shopify, even as it stands today, might be too stable to be affected by a significant management change. The founder and the CEO, Tobias Lütke, is still steering the ship, and the company is well on its way to becoming the Amazon of social-media-driven e-commerce. Its financial growth is beyond impressive, and the company has minimal debt and a lot of cash to work with.

The company is already ideally placed to help businesses of every scale create or improve their e-commerce front. But its real strength and growth potential lies in the fact that more and more people now prefer to make purchasing decisions directly on social media platforms (Instagram, Facebook, etc.). That’s something Shopify is well equipped to help businesses with.

Foolish takeaway

In Feb. 2020, Shopify came quite close to reaching the $2,000-per-share threshold. If the company keeps up its growth pace, it might as well reach that level and go beyond. And if you wish to cage this growth beast in your portfolio, buying now might be worth considering. The stock has languished long enough, and the chances of it dipping are comparatively lower than it rising again.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. 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 Adam Othman owns shares of Shopify. David Gardner owns shares of Amazon and Facebook. Tom Gardner owns shares of Facebook and Shopify. The Motley Fool owns shares of and recommends Amazon, Facebook, Shopify, and Shopify and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.

More on Tech Stocks

grow money, wealth build
Tech Stocks

TFSA Cash: Turn Your $81.5K Into $330K by 2032

These Canadian stocks have the potential to deliver average annual returns over 15% and create significant amount of wealth for…

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

1 TSX Tech Stock to Buy Today and Forget for the Next 5 Years

This high-growth tech stock could multiply your invested money in the next five years if you buy it in time.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Tech Stocks

TFSA Investors: Got $6,000? Here’s How You Can Power Up Your Portfolio

Are you trying to find stocks to add to your TFSA? Here’s how you can power up your portfolio!

Read more »

Hand holding smart phone with online shop concept on screen
Tech Stocks

Shopify Stock or Lightspeed Stock: Should You Buy Either?

Shopify stock (TSX:SHOP)(NYSE:SHOP) and Lightspeed stock (TSX:LSPD)(NYSE:LSPD) are both up in the last month, but should you buy?

Read more »

Tech Stocks

Got $300? 2 Simple TSX Stocks to Buy Right Now

These two TSX stocks aren’t as popular as other names, but they are smart buys right now because both are…

Read more »

shopping online, e-commerce
Tech Stocks

Better Buy: Shopify (TSX:SHOP) or Amazon (NASDAQ:AMZN)?

The e-commerce giants in Canada and the U.S. have underperformed in 2022, although critical investments for growth are ongoing in…

Read more »

Shopping and e-commerce
Tech Stocks

Shopify (TSX:SHOP): Well-Positioned for a Massive Rally

Shopify (TSX:SHOP)(NYSE:SHOP) stock is a great e-commerce growth darling that could heat up over the next 18 months.

Read more »

Young woman sat at laptop by a window
Tech Stocks

Is Pinterest Stock a Buy?

Pinterest's business may be stabilizing, but its stock probably hasn't bottomed out yet.

Read more »