3 Reasons Shopify Inc (TSX:SHOP) Could Soar in September

Shopify Inc (TSX:SHOP)(NYSE:SHOP) stock has been soaring for years, and it could soar once more in September.

| More on:
online shopping

Image source: Getty Images

Shopify (TSX:SHOP)(NYSE:SHOP) stock appears poised to soar once more in September. Currently trading at $1,946, it’s just a tiny percentage away from its all-time high of $2,070.

Of course, a stock’s current price doesn’t tell us where it’s going. That depends on a million factors, ranging from fundamentals and insider buying to publicity and hype. But this September, Shopify is fresh off a string of good news stories that’s likely to drive investor interest higher. Accordingly, it has a good chance of soaring in September as long as the broader markets behave reasonably well. The following are three key reasons why.

Reason #1: The TikTok deal

One big reason why Shopify could soar in September is because of its deal with ByteDance’s popular TikTok service. TikTok is the fastest-growing social media app in the world and is rapidly becoming one of the largest. It may be the largest already in terms of mobile downloads, as it’s rapidly closing in on 1.1 billion users. Shopify’s integration will allow influencers to sell their Shopify store’s products directly on TikTok. The exact revenue impact of this won’t be known until next quarter or later, but the hype surrounding the story could drive the stock higher anyway.

Reason #2: Strong growth

Another reason why Shopify could rally higher in September is because of its sky-high growth. Shopify’s revenue grew at 56% in its most recent quarter and grew at over 90% in the four quarters prior to that. It has been an incredible thing to witness — so much so that some commentators actually reacted negatively to the 56% second-quarter growth rate. Having 56% year-over-year growth is in itself amazing, but, compared to the prior four quarters of revenue basically doubling, it looks weak. Ultimately, it doesn’t matter, though. Even with the deceleration, SHOP still beat on both revenue and EPS in the most recent quarter. So, the company’s prospects look rosy.

Reason #3: Celebrity endorsement

Last but not least, Shopify has one big factor that could cause it to rally higher in September: celebrity endorsement.

Now, I’m not saying that celebrities are running out to their social media accounts to promote Shopify, but implicit support is there. Specifically, it is there in the form of celebrities hosting their stores on Shopify. You see, over the years, Shopify has become the platform of choice for celebrity merchandise. Some leading celebs on the platform include the following:

  • Adele
  • Drake
  • Jeffree Star
  • Justin Bieber
  • Kanye West

The fact that these celebrities host their sites on Shopify is encouraging, because it could give Shopify some cultural cachet. Certainly, it’s not a secret that these celebs host their stores on Shopify. If it becomes even more widely known, then that could lead to more vendors — especially entertainers — signing up. People have a tendency to follow the popular, and SHOP currently leads among e-commerce platforms when it comes to courting the world’s top celebrities. In time, that could lead to real revenue gains for the company.

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. Fool contributor Andrew Button has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Shopify. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $1,140 calls on Shopify, short January 2022 $1,940 calls on Amazon, and short January 2023 $1,160 calls on Shopify.

More on Tech Stocks

top TSX stocks to buy
Tech Stocks

2 Top Stocks That Could Turn $10,000 Into $50,000 by 2030

TSX investors can buy shares of quality growth stocks, such as Snowflake, allowing them to generate exponential gains in 2023…

Read more »

Tech Stocks

Don’t Wait for a Market Bottom: These 2 Stocks Are on Sale

Two of the best Canadian growth stocks could keep soaring in 2023 and beyond.

Read more »

clock time
Tech Stocks

3 Top ‘Future’ Stocks to Hold for the Rest of This Decade

Canadian growth stocks like Constellation Software are starting to look appealing.

Read more »

Credit card, online shopping, retail
Tech Stocks

Nuvei stock: Can This Gainer Keep on Running?

Despite a 40% increase in its stock price, I expect the uptrend in Nuvei to continue, given its higher growth…

Read more »

value for money
Tech Stocks

3 Growth Stocks You Can Buy Now With Less Than $100

Thanks to the recent bear market, you can now buy growth stocks like Shopify at bargain prices.

Read more »

Upwards momentum
Tech Stocks

The 1 Canadian Stock I Think Could Double in 3 Years

Here’s why this top Canadian stock has the potential to double in three years or sooner.

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

Why Open Text Stock Rose 11% Last Month

Not all tech stocks are performing poorly. In fact, Open Text stock (TSX:OTEX) continues to rise higher, though it's still…

Read more »

Businessman holding AI cloud
Tech Stocks

2 AI Stocks to Watch in February 2023

Those looking to invest in AI stocks can consider companies such as Nvidia and CrowdStrike Holdings right now.

Read more »