Over the last five years or so, there has been one company that seems to continue dominating finance headlines. That company is Shopify (TSX:SHOP). The e-commerce company from Ottawa has risen to prominence as the “it” stock of the last decade.
But what about the next decade? After all, this last decade has been one of superb highs as well as ultra lows. So, let’s look at what the company has in store and whether now is the time to buy or avoid Shopify stock.
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About Shopify stock
It might be that you’ve read a lot about how well Shopify stock has done as stock without knowing much about it. The company provides ecommerce services to merchants all around the world, focusing on small- and medium-sized businesses. About two million businesses operate around the world, with some of the most well-known retailers in the world using the company’s services.
That doesn’t mean it’s been smooth sailing, however. In July 2022, Shopify stock announced it would be laying off about 10% of its workforce. This came after the stock grew too much, too soon, with the chief executive officer admitting they made mistakes.
Another round of layoffs then came in May 2023, when Shopify stock let go a further 20% of its workforce. However, it also achieved more income from selling its Shopify Logistics arm. And from there, things started to improve.
The year ahead
The last year of gains has come from moves that Shopify stock made to become more focused. However, it’s not that we’ve seen too much actual growth yet. Shopify stock managed to focus back on e-commerce and making the best platform. And it seems that the company achieved some strong growth from this alone.
However, in the near future, there is likely to be a more broad-based rebound in tech stocks like Shopify stock. This could mean that an excited market will turn towards Shopify stock once more for growth — especially as interest rates decline, inflation goes down, and more merchants become interested in upgrading once more.
In fact, it’s likely that as growth and profitability improve, Shopify stock should, therefore, achieve profitability once more. That would be an incredible improvement after seeing so much debt for so long.
What about now?
For those interested in immediate growth, Shopify stock could provide that in the near future — especially as earnings are right around the corner. For now, the company is predicted to post earnings per share at US$0.31, which would be growth of an incredible 343% compared to the same time last year.
Furthermore, revenue is expected to hit US$2.07 billion at 19% year over year. But watch closely, as it tends to be that Shopify stock manages to beat out earnings estimates quarter after quarter. So, afterwards, look out for further analyst recommendations on the stock — especially if it achieves profitability.
For now, shares of Shopify stock trade at $105 per share, which is still less than half of all-time highs. And if we’re headed towards that future, I would say Shopify stock is still quite a buy.
