Shopify (TSX:SHOP) stock exploded higher last week, thanks to a marvellous quarter that blew away most of the estimates. Undoubtedly, Shopify stock really cooled off going into the big quarterly reveal. And as it turned out, that September-October cooldown set the stage for an incredible pop.
Indeed, if you doubted the firm in its moment of pain, paying too much merit to the rate and recession fears, you missed on a historic surge. In prior pieces, I’ve urged investors to stay the course with the e-commerce darling, even with the unfavourable macro conditions.
With rates on the U.S. 10-year note retreating slightly, it certainly seems like the post-earnings rally in SHOP stock may have just a bit more room to run. And though I’m not a fan of chasing momentum plays, I still think Shopify stock is a worthy addition for young long-term investors who seek to beat the markets.
Though the ride will probably be more volatile, I still think Shopify can help make the job of beating the TSX Index a heck of a lot easier over the next three to five years, especially if we have seen a peak in rates.
SHOP stock: More outperformance in the tank?
Shopify extended its run on Friday, with shares rising another 2.4% on the day, just a day after the stock blasted by around 22%. Now sitting at around $84 and change per share, I’d look for the e-commerce darling to make a run for new 52-week highs. Right now, the 52-week high is just shy of $93. If rates continue to retreat and investors pile back into the tech titan, I view the $100 level as a realistic target.
In prior pieces, I looked to the $100 mark as a realistic area for SHOP stock to settle in the near term. While the easy money has already been made, I find it encouraging that growth is heating up again, even with the firm’s slightly lower headcount. Indeed, Chief Executive Officer Tobias Lütke has done a great job with his firm’s strategic shift so far. The big question is whether it can take Shopify stock even higher in the face of some pretty ugly macro headwinds. Personally, I’m a believer in Lütke and think the firm can continue growing revenues at an impressive pace after a year of leaning out.
“We are faster, we are leaner, we are more focused on our mission and becoming this global leader in commerce,” said Harley Finkelstein, president of Shopify.
The Foolish bottom line on Shopify shares
It’s hard not to be upbeat after a wonderful quarter with a side of an upbeat forecast. As the firm moves into the artificial intelligence age, I think Shopify has the means to move higher, even without help from the TSX Index. Shopify is back. And I still think it’s reasonably priced relative to its growth prospects.
The Shopify ecosystem is robust, and it could become even more robust over time, as the firm returns to its roots. The latest quarterly beat may very well be just the start.
