Shopify’s (TSX:SHOP) Huge Partnership With Google Sent the Stock Soaring 7%

Shopify stock could present more upside to investors with its massive partnership with Google, sending its share price soaring.

| More on:
calculate and analyze stock

Image source: Getty Images

The massive tech sector stock sell-off intensified over the past few weeks, resulting in losses across the board for Canadian tech companies trading on the TSX. Even the growth stock darling, Shopify (TSX:SHOP)(NYSE:SHOP) lost the momentum it gained over the last few years with its remarkable meteoric growth.

The tech sell-off was understandable at first. Many companies in the industry received substantial tailwind from the pandemic, driving revenue growth and increasing valuations. However, the pandemic tailwinds began fading away as the global situation began normalizing this year.

After a year that saw many tech stocks soar to record highs, it was hardly surprising to see them come down. Despite the industry-wide sell-off, Shopify remained resilient in the face of adversity.

Today I will discuss Shopify’s resilience on the stock market and how a deal with Alphabet’s Google has revitalized its growth.

Shopify’s resilience

Shopify had an incredible performance in 2020 but began declining at the start of 2021. The stock hit the $1,400 per share region and stabilized within that range. Unlike many other tech stocks, Shopify did not get any cheaper from those levels. Even the most recent selloff frenzy in tech stocks did not sway Shopify.

Many investors consider Shopify to be an excellent growth stock and were unwilling to sell the stock for any cheaper than in the $1,400 range. It is such a high-quality business that it will be impossible for the stock to get undervalued.

Shopify’s Google deal

A recent developer conference saw a flurry of new growth ideas being thrown around by Google. Amazon is a leader in the e-commerce space. In order to push the competition in this sector, Google announced a partnership with Shopify.

The Shopify stock reacted immediately to the good news. As two of the most significant tech businesses worldwide, the partnership added more value to Google and Shopify. Shopify stock is trading for $1,464 per share at writing and is up 7.23% from its valuation before the deal was announced.

Over the years, the spectacular growth of Shopify stock was driven by the sustained demand for its e-commerce platform, solid growth in its top line, and its growing market share. The recent deal with Google will see Shopify’s 1.7 million merchants integrate with the search engine giant’s offerings. With just a few clicks, the retailers can appear more prominently on Google.

Google eliminated fees for retailers on its shopping service last year to lure merchants from Amazon. Its partnership with Shopify will allow both tech giants to see business improve.

Foolish takeaway

Shopify has become the best Canadian growth stock of all time, offering its investors stellar returns. Its partnership with Google adds the promise of exceptional growth potential in the coming years.

The stock may not get any cheaper, and the barrier of entry is high. However, it could be suitable for you to pick up Shopify stock before the growth premiums return and the stock rallies.

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.

Fool contributor Adam Othman owns shares of Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify and recommends the following options: short January 2023 $1160 calls on Shopify and long January 2023 $1140 calls on Shopify.

More on Investing

FREIGHT TRAIN
Investing

CNR Stock: Should You Buy Today?

Canadian National Railway has been hit in recent quarters, as economic growth has slowed, with CNR stock declining 10% in…

Read more »

Family relationship with bond and care
Dividend Stocks

TFSA Investors: 3 Cheap Canadian Stocks for Retirees

These three Canadian stocks are super cheap for retirees looking for a great buy that will last the test of…

Read more »

calculate and analyze stock
Dividend Stocks

CPP Disability Benefits: Here’s How Much You Could Get

Not everybody can get CPP disability benefits. If you want some passive income, consider investing in Royal Bank of Canada…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

Boosting Your Monthly Income: TSX Stocks That Deliver

Dividend investing can boost regular or active incomes, especially select TSX stocks that pay monthly dividends.

Read more »

consider the options
Tech Stocks

Better Buy (2024 Edition): Shopify or Nvidia Stock?

Shopify (TSX:SHOP) isn't the only red-hot tech stock in town that could add to recent gains.

Read more »

Bad apple with good apples
Investing

5 Stocks You Can Confidently Invest $500 in Right Now

These stocks could significantly grow your investment over the next decade.

Read more »

Illustration of bull and bear
Tech Stocks

A Bull Market Is Coming: 3 Growth Stocks That Could Thrive

Given their high growth prospects and cheaper valuation, these three growth stocks would be an excellent buy as the market…

Read more »

Golden crown on a red velvet background
Energy Stocks

Enbridge Stock: This Dividend Aristocrat Could Gain in 2024

Enbridge (TSX:ENB) stock is looking like a great buy as management expects it to grow in 2024.

Read more »