SALE: 60% OFF! Shopify Stock Is Too Cheap to Ignore Today

No external or internal factor might justify Shopify stock’s enormous 60% losses in 2022.

| More on:
value for money

Image source: Getty Images

Shopify (TSX:SHOP)(NYSE:SHOP) continues to be the worst-performing TSX stock this year. SHOP’s stock price fell by 9.2% last week to around $694 per share after witnessing more than 11% value erosion in the previous week. Notably, this is the fourth consecutive month it’s continuing to fall sharply. As a result, Shopify stock is now trading with more than 60% year-to-date losses. Let’s take a quick look at some key factors responsible for its big losses in recent months before I explain why it could be the right time to consider buying SHOP stock today.

Why Shopify stock is falling

Multiple internal and external factors have fueled a big crash in Shopify stock in the last few months. In December 2021, surging inflationary pressures made investors worried as they started speculating about monetary policy tightening. This factor, along with concerns about most tech stocks being overvalued, triggered a massive technology sector-wide selloff. As a result, Shopify stock lost nearly 37% of its value in December and January combined.

In the first half of February, the tech meltdown continued. But SHOP stock remained largely mixed due to investors’ high expectations from its Q4 earnings event on February 16. While the Canadian e-commerce company’s December quarter revenue and earnings managed to beat expectations, Shopify stock fell as Street analysts slashed their target prices on the stock citing its weak 2022 revenue growth outlook and growing competition. That’s why it dived by 26% in two days, even after reporting better-than-expected results.

In the final week of February, tech selloff intensified further after the Russian invasion of Ukraine started, making investors worried about its implications on the global economic outlook. Concerns related to the ongoing geopolitical conflicts are continuing to hurt investors’ sentiments. As a result, Shopify stock has seen steep losses in the first half of March.

Should you buy Shopify stock today?

I don’t expect Shopify stock to see a massive turnaround immediately as the ongoing Russia-Ukraine war and tightening monetary policy amid inflationary pressures could continue to affect it in the near term. However, I don’t think any of these factors justify SHOP’s enormous 60% losses in 2022 so far.

Despite its ability to consistently post stronger-than-expected sales and earnings growth and its rising focus on international market expansion, these losses suggest that the recent Shopify stock crash is overdone. While some analysts may have found Shopify’s 2022 revenue-growth outlook dismal, I was already expecting its year-over-year sales growth rate to decline in the near term after the global pandemic unexpectedly boosted its growth in the last couple of years.

Also, I still expect Shopify to continue beating analysts’ consensus earnings growth expectations with the help of increasing demand for e-commerce services.

These are some of the key reasons why I find Shopify stock dead cheap to buy now — especially for long-term investors who want to invest in some fundamentally strong, high-growth Canadian stocks.

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.

The Motley Fool owns and recommends Shopify. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

More on Tech Stocks

Piggy bank next to a financial report
Tech Stocks

TFSA Contribution in 2023: Where to Invest $6,500 Right Now

Here's why you need to consider buying NBLY stock and Docebo stock for your TFSA portfolio in 2023.

Read more »

A bull outlined against a field
Tech Stocks

3 Cheap Stocks I’d Buy in Bulk Before a Bull Market Arrives

After a hot start to the year, here are three discounted TSX stocks that I’d seriously consider loading up on…

Read more »

A worker uses a double monitor computer screen in an office.
Tech Stocks

Better Buy: Shopify vs. Constellation Software

Are you interested in buying a tech stock? Find out which is the better buy between Shopify and Constellation Software.

Read more »

Woman has an idea
Tech Stocks

3 No-Brainer Stocks to Buy for Less Than the Cost of 1 Tesla Share

Are you confused as to whether to buy Tesla shares? Here are three no-brainer stocks that can give you exposure…

Read more »

Tech Stocks

1 Under-the-Radar Beneficiary From the Rise of ChatGPT

ChatGPT will benefit AI-enabled stocks like Docebo (TSX:DCBO).

Read more »

Businessman holding AI cloud
Tech Stocks

TFSA: 2 AI Growth Stocks for Your $6,500 Contribution

Here are two of the best AI stocks to buy in Canada in 2023.

Read more »

edit Colleagues chat over ketchup chips
Tech Stocks

The Best Stocks to Invest $50,000 in Right Now

You can create a portfolio of undervalued stocks with $50,000 right now. Here are three such stocks you can add…

Read more »

Tech Stocks

The Safest Semiconductor Chip Stocks to Own in March 2023

Canadians can invest in two safe semiconductor chip stocks, as the country prepares to expand its industry presence and become…

Read more »