Shopify (TSX:SHOP) stock has come back such a long way since the dark depths of last October. Though the rally seems to have run out of steam along with the rest of the technology sector, investors may be wondering what’s up next for Canada’s sensational e-commerce darling. Shares of SHOP slipped nearly 8% last week despite a lack of needle-moving news. In any case, it’s clear that Shopify stock’s valuation got a tad too frothy.
In prior pieces, I warned investors not to chase Shopify stock as it surged toward the $100 mark. Now that the bear is in control again, I do think the stock is worth nibbling at if you’re a young investor who’s looking to grow your TFSA (Tax-Free Savings Account) or RRSP (Registered Retirement Savings Plan) for the next 10 years or more.
Shopify stock hit as tech stocks pullback from their highs
Despite the recent pullback off 2023’s peak, I remain incredibly upbeat on the company following its solid second quarter. Revenue growth hit a snag but could be in a spot to really accelerate on the back of a consumer that may very well be more resilient than expected.
Sure, recessions never bode well for digital spending. However, we’ve gone more than a year of preparing for a recession that probably should have struck by now. In any case, preparing for a recession that may never come could accompany a consumer-spending re-acceleration that could propel retailers from across the board. Indeed, Shopify seems well-equipped to benefit from such a recovery.
Innovation and turning tides could jolt growth from here
The second quarter was decent, with sales growth rising around 28% for the first two quarters of 2023. I think growth could march even higher, as Shopify continues to offer its merchant network the very best technologies to help drive sales.
With the rise of AI (Artificial Intelligence), I’d look for Shopify to invest a great deal into AI support chatbots, and other LLMs (large language models) to help merchants really bring out the best in their online stores.
Undoubtedly, AI tech could separate the haves from the have-nots over the next decade. And I believe Shopify is definitely one of the firms that could use AI to its advantage as it looks to take on even more of its corner of the massive e-commerce market.
Shopify stock’s long-term growth is impressive
From a long-term perspective, Shopify stock looks like a terrific bargain after the latest slip off the year’s high. Still, higher interest rates and a potential tilt into a recession could easily bring forth more downside in the pricier growth stocks. As wonderful as Shopify’s growth profile is, it can still easily shed another 20% from here if the September season drags down broader markets after what was a stellar start to the year.
Personally, I’d buy a quarter (or half) position in Shopify stock right here, while reserving some funds to buy more shares on an even larger dip. The stock could easily fall to $65 per share in a matter of weeks. So, do be ready to keep adding to your position if you’re keen on getting in after the stock’s recent breather. Sure, the stock is cooling, but the recovery, I believe, is still on the table.
Is Shopify stock still expensive at $74 and change? Possibly. However, it’s cheaper than it was two weeks ago. If you’re in it for the long run, I do think the dip is buyable.
