Shopify (TSX:SHOP) stock recently surged on the back of strong numbers for Black Friday. Indeed, consumers were looking quite down heading into the biggest single-day shopping event of the day. But the abundance of bargains was enough to get many to open up their wallets.
For Black Friday 2023, Shopify smashed records, with sales soaring 22% year over year — a remarkable jump that signifies to robustness of consumers.
Clearly, there’s still an appetite for a great deal, even as what remains of inflation lingers around for a while longer, all while wages remain stagnant. In numerous prior pieces, I noted the possibility of Shopify stock at above $100. Fast forward to today, and shares are just over a dime shy of the level.
Undoubtedly, the promising Black Friday season was enough to jolt the stock over the level briefly, right before a downgrade courtesy of Piper Sandler, who rang the alarm bell over its elevated valuation. Shopify stock is getting frothy again after surging over 175% from its 2022 lows. That said, shares are nowhere near as frothy as they were at their peak back in 2021.
Shopify stock is overbought, but it may not be overvalued quite yet
Arguably, Shopify’s long-term growth prospects are better today than they were back then. These days, we’ve also got the epic rise of artificial intelligence (AI), which could give tech-leveraging innovators — like Shopify — a much-needed shot in the arm as they look to make employees and customers more productive. The way I see it, the AI tailwind plus falling interest rates could create some sort of Goldilocks environment for the high-growth tech titans.
Whether such tech takes e-commerce titans into overdrive remains to be seen. In any case, I wouldn’t take Piper Sandler’s recent Shopify stock downgrade as gospel.
Analysts on Wall Street have been known to be wrong from time to time. And when it comes to Shopify, I think there are more gains to be had in 2024, especially if we’re in for a couple of interest rate cuts. Rate cuts could send the high-multiple, higher-growth tech stocks soaring much higher. Indeed, the stage looks set for more relief gains going into the new year.
Shopify stock still has room to run in 2024
Of course, a black swan not on our radars could swim in and cause investors to run in fear once again. However, for most long-term investors, I think Shopify stock ought to remain a long-term core holding, not a piece of paper to trade in and out of for a quick gain.
At the end of the day, Shopify has a growth story that’s probably the most promising of all tech firms in the country. As a nearly $130 billion company, Shopify’s best days may be behind it, but if the firm can continue to capture the hearts of merchants (and customers), the firm’s mission is far from over.
The Foolish bottom line on SHOP shares
The company is putting the power back in the hands of the little retailer. And as it continues to do this, it’s the retail heavyweights that could stand to lose a bit of ground. All considered, I still don’t think Shopify is absurdly overvalued after the latest Black Friday pop. Are shares pricier than they were several months ago?
Definitely, but don’t expect a catastrophic collapse to the magnitude of the one endured in 2022. If anything, I’d look for Shopify stock to steadily move higher as macro trends improve over the coming years while the company makes smart moves to increase the width of its platform. Don’t sleep on Shopify stock, folks!
