Is Now the Right Time to Buy Shopify Stock?

Shopify (TSX:SHOP) is a market-leading e-commerce platform provider, but is Shopify stock worth buying at current levels?

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Shopify (TSX:SHOP) is Canada’s largest e-commerce platform. Apart from its home country, it has markets in the U.S., Europe, Asia Pacific, etc. Over the years, this company has developed various software to help merchants get access to a wider audience. This has led to impressive growth for the company and for investors in Shopify stock.

Of course, the post-pandemic rally Shopify saw, which was driven by a plethora of stores being forced online, isn’t likely to materialize again. Additionally, the comps provided from the 2020-2021 surge mean that Shopify’s growth rate has deteriorated substantially.

With a potential recession on the horizon, many investors are writing this stock off. But is that the right choice right now?

Here’s my take on whether Shopify stock is still worth buying here.

Shopify stock gains another Wall Street bull

I’ve been bullish on Shopify for some time, which has proven to be the wrong choice, at least over the past 1.5 years.

That said, analysts covering this stock appear to be increasingly bullish. A recent report from JMP Securities analysts earlier this month provided an upgrade and a target price of US$65 for this stock. This move implies 30% upside for Shopify stock over Tuesday’s close of less than US$50 per share.

The analyst responsible for this upgrade used cloud-based e-commerce growth and Shopify’s dominant market position in this space as reasons to consider the stock. Notably, Shopify has been growing its market share over time — something this analyst points to as something to consider. And while risks of macro slowing are certainly pertinent, it’s this analyst’s view that Shopify can still outperform the market, given the company’s strong merchandize volume growth over time.

Additional new features could boost growth

According to recent reports, Shopify has introduced several new features that will enable its merchants to go global. The Shopify Markets and Market Pro will act as local cross-border logistics solutions, providing access to over 150 markets. Its new Shopify Payments feature will also facilitate merchant remittance in 22 nations around the world, including France, Switzerland, Finland, etc.

Furthermore, the e-commerce platform has introduced features like Shopify Audiences and Shopify Collabs. This will enable merchants to market their products in front of a larger audience and thus gain a larger customer base. 

I think the more products and solutions Shopify can offer its clientele base, the more robust its growth profile will be over time. These should boost the company’s growth profile from the near to medium term.

Bottom line

Thanks to its increasing market share, Shopify currently ranks among the top five global e-commerce platforms. Given Shopify’s strong financials against rising economic recession, the company would continue to grow its hold over the e-commerce market. Thus, I think now is a great time to continue accumulating Shopify stock for those who haven’t already done so.

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 Chris MacDonald 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.

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