What happened?
Shares of Shopify (TSX:SHOP)(NYSE:SHOP) jumped by nearly 15% last week to settle at $45.31 per share after losing roughly 25% of their value in the previous four weeks combined. By comparison, the TSX Composite Index inched up by 2.6% in the week ended on September 9. Despite its recent rally, SHOP stock still trades with massive 74% year-to-date losses.
So what?
Last week’s sharp recovery in Shopify stock came after the company announced some big changes to its top leadership on September 8. The Canadian e-commerce giant promoted its vice president of product Kaz Nejatian to chief operating officer post with immediate effect. It has also hired Jeff Hoffmeister from Morgan Stanley, who will replace its current chief financial officer Amy Shapero after Shopify’s upcoming quarterly earnings event scheduled for October 27. Apart from a tech sector-wide recovery, these leadership changes could be responsible for a sharp rally in SHOP stock last week.
Its recent changes in top leadership can be seen as a part of Shopify’s ongoing efforts to regain investors’ confidence amid its slowing sales growth rate in the post-pandemic era.
Now what?
Shopify has been one of the worst-performing stocks on the TSX so far in 2022. After consistently falling for seven months, the stock showcased minor strength by posting 11% gains in July 2022. But SHOP stock turned negative again in August, as rising fears about a looming recession started haunting investors. While last week’s sharp rally has taken it up by 9% month to date in September, continued uncertainties about the macroeconomic environment may keep it highly volatile in the coming months as well.
Despite its roller-coaster ride in the last year, Shopify stock still looks really attractive for long-term investors, as short-term macrolevel uncertainties might not hugely impact its long-term fundamental outlook. This could be one of the key reasons why Bay Street analysts’ 12-month consensus target price on SHOP stock is $76.64 per share, reflecting about 69% upside potential from its Friday closing level.
