Shopify Stock Rose 15% in November: Is it a Buy Today?

Shopify (TSX:SHOP) stock rallied 15% this month but is still down 69% year to date, so should investors worry that another drop is in the works?

| More on:
A shopper makes purchases from an online store.

Image source: Getty Images

Shopify (TSX:SHOP) saw some positive movement for the first time in quite a while in November. The tech stock finally saw upward movement of 14% in just one month. However, it remains down 69% year to date.

So, the question is, with this positive movement today, is Shopify stock finally a buy?

The first jump

There were two catalysts for a jump from Shopify stock in the last month. Coming off of strong earnings at the start of the month, mid-November saw another rise in Shopify stock. The stock jumped 25% due to Wall Street analysts stating the company was due for a rally, as the market looked like it may be finally recovering.

The news came as the U.S. Bureau of Labor Statistics released its monthly report on wholesale prices, with inflation coming in lower than expected, rising 8% from the year before. This ease in inflation showed analysts that perhaps the worse is now over, and tech stocks like Shopify stock would soon see an investment.

The second jump

The second reason that Shopify stock came from its major growth during Black Friday to Cyber Monday. Despite inflation rising, the company cutting costs, interest rates on the rise and other bad news, the company still saw growth. In fact, from Black Friday to Cyber Monday the company brought in US$7.5 billion merchant sales for the one weekend, blowing last year out of the water.

The growth was a 19% increase year over year from the US$6.3 billion brought in last year. Peak sales were also up from US$3.1 million to US$3.5 million per minute, with consumers spending an average US$102.10 per order.


This improvement is remarkable given the lower interest in Shopify stock this year. Analysts worried how the stock would fare during a recession and downturn, and they had every right to worry. After all, executives admitted the company expanded too much, too soon and had to make major layoffs and cuts throughout the year.

But it looks like with these record-breaking results Shopify stock could be back on track. That’s what shares would suggest, with this second jump marking a 15% rise in the last month alone. And now the company cannot be ignored, with analysts beginning to weigh in and raising price targets — especially as the company comes off strong earnings — and with this record-breaking performance suggesting an even stronger next quarter.

Bottom line

So, if Shopify stock a buy? Right now, shares are still down 69%. Do I think that means it’s going to rise by that much in the future? No, I really don’t. The stock was overvalued and that was clear. However, with the company getting back on track, there is a real chance that the stock could soar to a solid potential target price of $75 per share. That would create a potential upside of 36% as of writing.

While we’re not out of the woods yet, remember that investments shouldn’t be made with the thought of sales in the near future. Shopify stock has a strong future ahead of it, operating in 175 countries and growing stronger through acquisitions and major partnerships. So, I would certainly buy with the attitude that this stock could provide you with strong growth that lasts a lifetime.

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 Amy Legate-Wolfe has positions in Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.

More on Tech Stocks

Tech Stocks

Your Future Self Will Thank You for Buying Lightspeed Stock in 2023

Here’s why you may want to add LSPD stock to your portfolio in 2023 to hold it for the long…

Read more »

a person watches a downward arrow crash through the floor
Tech Stocks

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

Waiting for a market crash can take away the opportunity to buy early in the market rally while growth stocks…

Read more »

Coworkers standing near a wall
Tech Stocks

What’s Next for Magnet Forensics Stock After Hitting a 52-Week High Last Week?

While TSX tech stocks have lost around 30% last year, Magnet Forensics stock has soared 82%.

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Tech Stocks

Have $500? 2 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

Got $500 to invest? Consider buying these stocks that are too cheap to ignore.

Read more »

little girl in pilot costume playing and dreaming of flying over the sky
Tech Stocks

Got $1,000? Buy These Hot Growth Stocks Before They Take Off 

Growth stocks are best when bought at their lows or early in the rally. Now is the time to buy…

Read more »

Growing plant shoots on coins
Tech Stocks

2 Growth Stocks to Invest $100 in Right Now

Even with the market riding a bullish rebound, you don’t need a whole lot of cash to invest in growth…

Read more »

work from home
Tech Stocks

Could Lightspeed Stock Be a Big Winner in 2023?

Investors can capitalize on Lightspeed’s low valuation and benefit from the recovery in its price.

Read more »

Tech Stocks

TFSA Passive Income: How I’m Investing to Make $2,000/Year From Dividends

I am increasing my dividend income by investing in dividend stocks like the Toronto-Dominion Bank.

Read more »