Shopify (TSX:SHOP)(NYSE:SHOP) stock plunged a nasty 3.5% on Monday, bringing shares down nearly 17% from all-time highs. Indeed, Mr. Market has not been kind to some of this market’s high flyers. The higher the multiple or the greater the growth prospects, the more punishment he dealt to momentum-chasing investors who got in at the wrong time. Undoubtedly, Shopify stock will always be on the receiving end of most growth-focused sector rotations or selloffs.
As Canada’s top tech stock, there will also be a bit of jitters, as many past Canadian firms with the largest market caps have endured vicious corrections. Whether or not a Canadian bank regains the lead over Shopify is anyone’s guess. Regardless, a handful of skeptical pundits who view market valuations as bubbly will likely not be tempted to buy the dips in many of the fastest-growing tech stocks now that they’re in reversal mode.
Shopify stock: Magnificent managers that know how to get things done
Personally, I think the recent correction in Shopify stock is less remarkable in the grander scheme of things. If anything, it’s a gift courtesy of Mr. Market just in time for the holiday season. Shopify has always been expensive, and even short-sellers have been unable to keep it down for very long.
Why? The e-commerce firm doesn’t just have a great management team; it has a legendary founder in Tobias Lütke at the helm. As you may know, I’m a massive fan of the man’s stewardship. As long as he’s top boss, I think Shopify has room to run, as it looks to become Canada’s first trillion-dollar company. Although the milestone seems far-fetched or out of reach, I think it’s just a matter of time, given all the traits that Shopify shares with the greatest American tech companies that continue to lead the broader indices higher, even under the most unprecedented conditions.
With Shopify trading at just south of $1,800 per share, there are a handful of reasons to punch your ticket on the latest dip, with a bear close to rearing its ugly head yet again.
Shopify: The growth is unlikely to stall anytime soon
How can a firm as mature as Shopify continue raising the bar on itself? Although the company came up short for the first time in a long time, its stock surprisingly held up. Undoubtedly, many Canadian investors are still hungry for next-level growth. And Shopify is able to continue delivering on that front, as it looks to upsell customers with new value-adding offerings while continuing to go after a total addressable market (TAM) in its corner of e-commerce.
It’s hard to imagine that Shopify still has room to run in the SMB (small- and medium-sized business) space. But it does, and it’s going to continue spreading its wings, beckoning in new customers with a growing line-up of intuitive, innovative offerings. Shopify Payments is just one of many intriguing growth levers that Lütke and his team can pull to build on Shopify’s strengths coming out of a historic year.
With Omicron spreading rapidly, one must also not discount the potential for more lockdowns and a reinvigoration of e-commerce sales. While pandemic tailwinds enjoyed in 2020 are unlikely to return, investors, I believe, should get aggressive with Shopify stock here, as year-over-year comparables become that much more favourable.
Today, Shopify is a $225 billion company. At this pace, though, expect Shopify to crack the $1 trillion mark at some point over the next seven to 10 years.
