Shares of Shopify (TSX:SHOP) sunk slightly this week, falling below the $100 mark after the company’s Investor Day event. Yet this could be the opportunity investors were waiting for. The stock reached 52-week highs, but it seems this could be the reason for a sink in share price rather than news from the Investor Day. In fact, based on what Shopify stock has going on, it’s going to be one of the tech stocks investors consider going into 2024.
What happened
Analysts came out with multiple reports about what Shopify stock expects for the future. Calling it “new and improved” in some cases, the company shared its conviction to gain growing market share in the ecommerce industry. Further, it continues to seek out expansion opportunities in the greater commerce market.
The stock is also looking to monetize merchant relationships. This would include through both cross-selling and upgrading opportunities. The focus now is on the big picture for Shopify stock. The company seems focused on finding long-term growth opportunities that have worked both on the market and for the company in the past.
That means continuing to focus on maintaining its position as the number one platform in the world. The second priority is to focus on generating more and more profit. That way, it can use the cash flow to continue focusing on maintaining that number one position.
It’s all in the numbers
Part of the impressive outlook came down to Shopify stock’s growth projections. The company has already shown upmarket progress as 18% of its mid-market accounts have grown more than 40% year over year, and 25% of its larger accounts. What’s more, Shopify stock is looking to add even more enterprise-level merchants as well.
The combination of all these catalysts has led analysts to believe that there should be around 18% revenue growth in 2024, and the e-commerce platform should continue to achieve double-digit growth even farther beyond. This goes along with what Shopify stock told investors during its most recent earnings report as well.
But it wasn’t all great news. In fact, some analysts had other less positive things to point out. So let’s look at that to get a well-rounded picture of the future of Shopify stock.
Some downgrades
Analysts agreed with all the above. The renewed focus and shape of the updates are all certainly positive, especially after a strong 2023, strong holiday season, and even more merchant-focused performance. Growth estimates also provide a positive outlook, but estimates may still be tapped out.
Given the high levels of growth in the forecast, some analysts downgraded the stock to sector perform, or even neutral. This follows a show of fortitude in what’s already happening, and therefore it doesn’t look like there is going to be any massive moves in the future.
So even though the stock certainly looks like it will maintain strong growth in the future, and continue its path to profitability, some analysts believe the stock’s value is already priced in. In fact, it’s already trading at a premium to many of its peers. While there is certainly more upside on the way, it’s unlikely that we’ll see shares rise another 55% in the next year.
So is Shopify stock a buy? Sure! Especially if you’re going to be a long-term investor looking towards a bull market. In that case, the stock should have cash on hand to look for more growth opportunities. But you may want to wait for dips like the one this week before buying in bulk.
