Here’s Why I Think Shopify Stock Could Have a Far Better 2023

Shopify stock is going to be a painful ride in 2023, but one worth enduring.

| More on:
Shopping and e-commerce

Image source: Getty Images

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.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.

More on Tech Stocks

A shopper makes purchases from an online store.
Tech Stocks

Better Buy: Shopify Stock or Amazon?

Shopify Inc. (TSX:SHOP) is well positioned for growth ahead.

Read more »

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 »