The TSX today has been rebounding strong. The last two months of the year were some of the best that we’ve seen in, well, two years! After huge growth, the markets fell after pandemic restrictions came down. And perhaps no company felt that as much as Shopify (TSX:SHOP).
Shopify stock hit all-time highs at $228.22 (adjusted for a stock split) before all but collapsing. Now, shares are back at 52-week highs as of writing. But is another drop due? Or should investors get back in on the action?
What happened?
Shopify stock saw immense growth during the pandemic as consumers kept their cash on hand. With no travel, commuting, or even eating out, consumers had money to blow. And e-commerce was really the only way to get those items.
Enter Shopify stock that saw shares absolutely explode. The problem was, the company may have grown too big for its boots in that time. It tried to turn into practically every kind of company related to e-commerce, from selling to shipping. But that was going to become too costly.
Once consumers cut back, Shopify stock couldn’t sustain its record-setting numbers. Instead, it had to cut back significantly. Shopify stock cut staff members and even its logistics business before returning to what it was good at, and that’s an e-commerce focus.
What’s happening now?
Today, Shopify stock is much of the same one that investors became interested in back in 2020. Shopify stock simply wants to be the best platform for small- and medium-sized businesses to sell their products. It’s easier said than done, but Shopify seems to be able to achieve it.
The company continues to provide merchants with what they need to thrive. And once they become even larger, they can still help them manage their accounts. It’s why companies as large as Skims by Kim Kardashian use the interface.
And during the company’s Investor Day, the first since 2019, Shopify stock doubled down on this. The focus would remain on creating the best platform, with a second focus on profit if only to put that cash towards the first goal.
Is it a buy?
Now, Shopify stock trades at 52-week highs, or at least near it, as of writing. The company hit the three-digit mark and started to show some signs of slowing. The question remains, however, what the new year will hold.
If Shopify stock can continue to demonstrate strong merchant growth and recurring revenue, there doesn’t seem to be a reason for Shopify stock to slow down — especially if consumers continue to see the economy improve.
With more cash in their pockets, consumers should start to show interest in Shopify stock again. Meanwhile, the company continues to see more growth opportunities by adding on as many businesses as it can that support its merchants.
So, all in all, as of writing, Shopify stock looks like a solid long-term choice. With a focus back on e-commerce, 2024 looks like it could be the year Shopify stock climbs back to greatness.
