Shopify (TSX:SHOP) stock started 2023 with a bang, but in recent weeks, shares have been giving up ground and fast. Undoubtedly, it’s only natural for sharp upward moves to be hit with the odd correction. However, with rate hikes finally working their way through the big banks, there’s concern that tech and the broader economy could be in for yet another doozy.
Indeed, the Bank of Canada (BoC) is ready to wrap up its rate hikes. Meanwhile, the Federal Reserve (Fed) south of the border still has a few more hikes to go before it’s content with hitting that pause on the rate-cut button. Undoubtedly, the barrage of rate cuts has already seemingly broken something. With a fear of a contagion spreading across Silicon Valley-heavy banks and even the mega-cap Canadian banks, the unease on Wall and Bay Street is almost palpable.
When relief and hope turns back into fear and anxiety, though, new investors should be ready to look at stocks on their radar with a calmer mind. That way, they’ll be able to get added value while most others are inclined to hit the panic button.
Shopify stock: Worth the ride if you’re a young investor
Shopify stock, in particular, is a name that’s prone to wild swings. It’s profoundly volatile, with a 2 beta, making it so much more volatile than the market averages.
Volatility, as you may know, works in both directions. Sure, volatility is perceived as a negative. However, for those willing to deal with the rollercoaster ride of moves, choppier rides can accompany greater discrepancies between a stock’s market value and its intrinsic value. At the end of the day, investors should seek to get the most value they can with every dollar.
Amid hard times, consumers need to stretch every dollar as far as it can go. The same goes with markets.
As tables turn against Shopify, I think those who missed the January 2023 run have been dealt another entry point. Shopify has a lot of pressure points and headwinds. However, longer term, I still view the e-commerce firm as one of Canada’s most enticing growth stories. Personally, I think Shopify stock is one of the better contrarian bets for those willing to stick it out through the next 15 years.
Yes, 15 years is quite a while. But wealth creation takes time. And it matters less how “difficult” the road is to get to the final destination, which, in the case of investing, is a prosperous retirement.
Shopify stock takes an unwarranted hit amid SVB’s demise
Last week, Shopify fell more than 12% in just over two trading sessions.
Indeed, the banking fears in Silicon Valley have spread to Canada’s tech scene. With Shopify now off around 20% from its February 2023 peak, I do view the recent bout of bearish news as a tad overblown.
Though Shopify CEO Tobias Lütke did acknowledge that SVB Financial is one of the 12 banks it uses, he also stated there’s a “very minor” impact from SVB’s failure.
The road ahead for SHOP
Looking ahead, Shopify is expected to continue innovating on the fronts of e-commerce, payments, and even fulfillment. Though the company has a lower headcount after recent layoffs, it’s not ready to drag its feet. Sure, headwinds are still in the forecast. But I think the firm will make it through, likely with gains in the cards for the year given the now tremendously low expectations.
