|Bid||314.39 x 1800|
|Ask||315.60 x 1200|
|Day's Range||312.13 - 335.00|
|52 Week Range||117.64 - 409.61|
|Beta (3Y Monthly)||1.24|
|PE Ratio (TTM)||N/A|
|Earnings Date||Oct 29, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||362.04|
Shopify Inc. (SHOP)(SHOP.TO), the leading multi-channel commerce platform, today announced that it has completed its acquisition of 6 River Systems, Inc. With this acquisition, Shopify is changing the fulfillment industry. The transaction adds 6 River Systems’ cloud-based software and fleet of collaborative mobile robots called “Chuck” to the Shopify Fulfillment Network, accelerating its growth.
An acquisition has put Shopify in contention to enter the fulfillment space, currently dominated by Amazon, an analyst says.
Guess?, Ollie???s Bargain Outlet, Twilio, Wix.com and Shopify highlighted as Zacks Bull and Bear of the Day
Shopify has been a huge winner in 2019. Earnings are booming and the company plans to compete more with Amazon. But with software stocks under pressure, is SHOP stock a buy now?
Here's an exercise for you. How much would you pay for $100 million per year of operating cash flow and maybe $1.4 billion in sales, growing at about 20% per year? Would you pay 10 times that revenue? Maybe 20 times that revenue? Certainly, you wouldn't pay 30 times that revenue. But that's almost precisely what investors are being asked to pay today for stock in Shopify (NYSE:SHOP), the Canadian e-commerce software house.Source: BalkansCat / Shutterstock.com Shopify's market cap is $39.8 billion, about 29.5 times its estimated 2019 revenue, based on the $680 million that came in for the first two quarters. Please let's not talk about earnings. There aren't any.So without any earnings, why the insane valuation? It's because of one magic word.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Magic Word is 'Amazon'Shopify is said to be competing directly with Amazon (NASDAQ:AMZN).How does a Canadian company with $380 million in sales for its most recent quarter compete with an e-commerce and cloud giant that earned $2.6 billion on revenue of $63.4 billion in its most recent quarter?Here's how The Observer put it just last month: "Shopify Overtakes eBay as Second Biggest Shopping Site After Amazon."How exactly has Shopify overtaken eBay (NASDAQ:EBAY)? The Financial Times notes that Shopify's market cap is now bigger than that of eBay. The market cap of eBay is $32.5 billion.But does this make Shopify bigger than eBay? It doesn't. Revenue for eBay in the second quarter was $2.7 billion. That's seven times more than Shopify brought in. Also, eBay had earnings of $403 million in its second quarter, or 46 cents per share. Is SHOP Stock a Bargain?What's even crazier is that we're supposed to consider Shopify a bargain now because the shares recently pulled back from their all-time high of $406, achieved in late August. This came after it priced a secondary offering of stock at $317.60 to help strengthen its balance sheet.Shopify needs to strengthen the balance sheet to pay $450 million for 6 River Systems, which makes robotic carts for warehouses. This will be added to the Shopify Fulfillment Network, announced in June, which mainly consists of a web page and a lot of promises.6 River Systems had just gone through a $25 million Series B funding round. The robots, dubbed Chuck, are the size of a big shopping cart and lead workers around the warehouse, rather than following them. You Don't Have to Believe MeI admit to being in the minority of InvestorPlace contributors in my suspicions about Shopify. Ian Cooper recently called it a "strong buy." David Moadel recently called this "the best time" to buy.What about my track record? I've been calling Shopify a bubble stock for almost two years, since it was trading in the mid-$70 range. In June I called the shares "my favorite mistake," claiming it was rising on a short squeeze. At the time, 28% of its shares were being held by shorts. The most recent percentage, according to Fintel, is 31%. By way of comparison, Tesla (NASDAQ:TSLA) has a short interest of 20%. The Bottom Line on Shopify StockThe bottom line here is that I've been consistently wrong on Shopify, and I might be wrong again.A few of InvestorPlace's writers are starting to get out their oxygen masks in the thin air and lean my way. Josh Enomoto says "don't let the red ink tempt you." Brad Moon says it's "time to be cautious."You can't make money on the stock you don't buy. I missed Shopify on the way up.I'm content to miss it on the way down, too.Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O'Flynn and the Bear, available at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Hot Stocks Staging Huge Reversals * 7 Under-The-Radar Growth Stocks That Could Benefit New Investors * 5 Excellent High-Yield Dividend Stocks to Buy The post Ignore the Crowd and Avoid Shopify Stock appeared first on InvestorPlace.
Banks and the bond market were closed for Columbus Day, although the stock market was open for business. That said, it was a quiet day on Wall Street as investors prepare for earnings. Let's look at a few top stock trades. Top Stock Trades for Tomorrow No. 1: Shopify (SHOP)Shopify (NASDAQ:SHOP) has pieced together a very impressive move over the past few weeks. After bottoming near $286 in late September, SHOP stock has quickly rallied almost $60 per share, now at $345.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThis one remains pricey from a valuation perspective and "only" came down 30% from the highs. But that outperformed many of its high-growth peers. Unfortunately for many and fortunately for some, Shopify never worked its way down to the $265 area to test its 50% retracement and 200-day moving average.That's how you know it has been a strong candidate. * 10 Hot Stocks Staging Huge Reversals In any regard, it's back over the 20-day moving average and is just shy of its 50-day moving average and 78.6% retracement near $347. If traders caught this one before the move and don't plan to hold for the long term, they might consider reducing their stake into possible resistance.Over $347 and the $360 mark is on the table. If resistance holds, see if the 20-day moving average buoys SHOP on a pullback. Below that and $300 could be a possible retest. Top Stock Trades for Tomorrow No. 2: Uber (UBER)Unlike Shopify, Uber (NYSE:UBER) has never really had much mojo as a public company. On the plus side, though, shares are pushing through the $30.75 area, which had been resistance earlier this month.If shares can clear the 78.6% retracement and the declining 50-day moving average, a move up to the 61.8% retracement at $35.50 and $36 resistance could be in the cards. Short of a big-time breakout, though, I expect that level to hold as resistance when tested.On the downside, let's see if Uber can put in a higher low above $28.58, showing a possible turning point for the bulls. Top Stock Trades for Tomorrow No. 3: Crowdstrike (CRWD)Crowdstrike (NASDAQ:CRWD) is getting killed on Monday and there's no other way to put it, down more than 10%.Shares are flirting with a major breakdown now. In late September, the $52 area held as support, sending CRWD stock up to nearly $70. After pulling back again though, this support level may be called upon shortly.Below last month's low of $51.61, there's a lot of room before the stock's IPO price of $34 comes into play. On a rebound, see how CRWD handles the $70 level. Top Stock Trades for Tomorrow No. 4: Harley Davidson (HOG)Harley Davidson (NYSE:HOG) has been a frustrating play for investors lately. It has chopped around the $32.50 to $36.50 area over the last six weeks with little regard for its 50-day and 200-day moving averages.However, it has been forming a downward channel, marked by lower lows and lower highs. A move over $35.50 could break the channel, sending shares to range resistance near $36.50 and possibly the 50% retracement near $37.If channel resistance holds, look for a break below the two-day low and 20-day moving average near $34.50. That may send HOG to the 50-day moving average and possibly the bottom of its range.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Beverage Stocks to Buy Now * 10 Groundbreaking Technologies Created by Universities * 5 Semiconductor Stocks Worth Your Time The post 4 Top Stock Trades for Tuesday: SHOP, UBER, CRWD, HOG appeared first on InvestorPlace.
On the surface, Canadian e-commerce company Shopify (NYSE:SHOP) has all the appearances of being a stock to buy. High flying SHOP stock is down 19% since the end of August, after a better-than-expected earnings beat pushed the stock up 28% over the course of that month.Source: Paul McKinnon / Shutterstock.com There are signs the fall correction may be over, with SHOP stringing together several days of gains, including 1.5% to close the day on Friday.However, it's also possible that the rough patch isn't over yet. In particular, the specter that its success is breeding competition is becoming a bigger concern.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Success for SHOPShopify has been very successful in becoming the e-commerce platform of choice for small businesses. The company's software is easy to use -- and it's affordable. Shopify has effectively removed many of the barriers to becoming an online retailer, encouraging individuals and small companies to take a crack at online selling. And the company has implemented measures to grow that business further. * 7 Beverage Stocks to Buy Now This includes going head-to-head in the brick-and-mortar retail space against Square (NYSE:SQ) with its own line of payment processing hardware. In September, Shopify announced the acquisition of 6 River Systems, a company focused on robotic warehouse fulfillment solutions. The move puts Shopify in a position to expand its fulfillment network in the U.S. and Canada. It also makes it more competitive against Amazon (NASDAQ:AMZN) in delivery of purchases. With global e-commerce sales pegged at $2.9 trillion in 2018 and growing, the potential for Shopify to expand is huge. After delivering first-quarter and Q2 earnings that smashed expectations, the stage was set for SHOP stock to surge. By the time it hit $406.99 on Aug. 27, Shopify stock was up nearly 194% on the year. Success Breeds CompetitionA number of issues were involved in the correction that hit SHOP over the past month and a half. Like many companies, Shopify has been impacted by the ongoing trade war between the U.S. and China. Tariffs that make products more expensive and threaten to cut consumer spending have the potential to impact online retailers, and that means Shopify's revenue could take a hit. A $603 million secondary share offering also led to a SHOP stock drop in September. The longer-term problem is that Shopify's success has not gone unnoticed. And that means the specter of competition. We saw the first signs of that in March, when Facebook's (NASDAQ:FB) Instagram announced Checkout, an online shopping tool that lets users buy products directly from the app. On Sept. 23, Microsoft (NASDAQ:MSFT) launched Dynamics 365 Commerce, new tools that helps retailers create online product pages. That's not a direct "build your own online shopping site" like Shopify -- yet -- but it's another step in the company's rumored move toward doing so. Then there is the sleeping elephant to Shopify's mouse: Amazon. Essential Retail makes the case that Amazon doesn't duplicate what Shopify is offering to small online retailers because it currently has no need to. As successful as Shopify has been, it's no real threat to Amazon at the moment. But should Shopify begin to scale up to the point where it does eat into the e-commerce giant's sales, Amazon would come at the Canadian company "hard and fast" with a competing solution.If that happened, the results for Shopify would not be pretty. The Bottom Line on Shopify StockAfter Friday's close, SHOP stock is at $329.26, but that's still up a whopping 157% year-to-date. Given that rapid rise and the challenges the company could face in coming months, Shopify stock may not be quite the bargain that it seems. As of this writing, Brad Moon did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Beverage Stocks to Buy Now * 10 Groundbreaking Technologies Created by Universities * 5 Semiconductor Stocks Worth Your Time The post It Is Time to Be Cautious With Shopify Stock as Competition Heats Up appeared first on InvestorPlace.
In 2019, investors in one of Canada's best tech names, Shopify (NYSE:SHOP), has enjoyed great returns. SHOP stock is up over 155%. So far Ottawa-based SHOP stock has been a high-growth company. Through its multi-channel commerce platform, merchants can set up online storefronts with retail functionality.Source: Jirapong Manustrong / Shutterstock.com Many analysts have been concerned about the high valuation of the stock throughout the year. However, the Shopify stock price has kept going up. On Aug. 27, SHOP stock reached an all-time high of $409.61. Now it is hovering around $330. * 7 Beverage Stocks to Buy Now With the recent drop investors are wondering if the share price can once again start to rise in the coming months. SHOP stock is expected to report earnings on Oct. 29. Let's look at what may be next for the share price.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Shopify Stock's Story So FarShopify stock has been a darling of Wall Street since its IPO in May 2015. It started trading at a price of $28. And it has become one of the most watched tech stocks.Quarter after quarter, the stock has been gaining impressive market share in the rapidly growing e-commerce industry. Its annual revenue growth has been around 50%.Shopify's growth comes from two main segments: Merchant Solutions and Subscription Solutions.The Merchant Solutions business includes tools that enable sellers to serve their customers better and sell more products. And they are more correlated with clients' Gross Merchandise Volumes (GMVs). Within Merchant Solutions, the group offers Shopify Payments, Shopify Shipping, Shopify Capital (working capital lending), and the Shopify POS (point of sale) system.Subscription Solutions offer merchants of all sizes monthly recurring subscription plans that cost from under $10 to over $2,000 per month. In other words, there are different tiers for different-sized merchants. Many analysts highlight the importance of the monthly recurring revenue (MRR) for the future strength of the company.Many on Wall Street credit the company's success with a wide range of tools that enable store owners to easily manage their businesses.Based on the growth story, there's certainly a bull case to be made for SHOP stock extending far beyond 2019, but it is plagued by over-valuation concerns. Therefore, in the next earnings report, Wall Street would like to see the guidance for the rest of the year to increase. What to Expect in SHOP's Q3 EarningsOn Aug. 1, SHOP stock reported strong Q2 results that beat analysts' average estimates, thanks to strong demand for its subscription solutions. On an adjusted basis, the group earned 14 cents per share.Shopify stock's revenue of $362 million surpassed the $350 million expected by analysts. It was a 48% increase from the comparable quarter in 2018. Merchant Solutions revenue grew 56%, to $208.9 million. Subscription Solutions revenue grew 38% to $153 million.Shopify Plus, the premium version of Shopify, has over 5,300 customers, including names like Johnson & Johnson (NYSE:JNJ), Unilever (NYSE:UL), and the Obama Foundation. About a quarter of the company's monthly recurring revenues comes from Shopify Plus merchants. Overall, Subscription Solutions is more profitable.As of June 30, 2019, Shopify had an impressive $2.01 billion in cash, cash equivalents and marketable securities. A year ago, that number stood at $1.97 billion.When Q3 results are released, investors may want to do due diligence to assess whether the number of stores and merchants will continue to grow, whether SHOP stock's subscription revenue will continue to grow, and whether Shopify will continue to offer merchants a technological lead in the e-commerce platform.However, Shopify has not yet reported any profits. And investors may have to wait several quarters before they see any meaningful profits. Could SHOP Stock's Margins Become a Worry?CEO Tobi Lutke recently stressed that SHOP would continue to innovate and launch new products and services for both merchants and their customers. Wall Street also expects the company to continue to grow via acquisitions.Over the summer, Shopify stock has announced that the group is entering physical fulfillment business. It will offer sellers access to a network of dedicated U.S. fulfillment centers to store and ship consumer goods for online orders. This move into logistics is likely to create new opportunities for the group. Management is hoping that Shopify merchants can now better compete with Amazon's (NASDAQ:AMZN) expanding distribution capabilities.SHOP bulls are happy to point out that the company's increased logistics services are likely to add to revenue growth, which is showing no sign of slowing down. In Sept. 2019, management announced a $450-million deal last month to acquire 6 River Systems, maker of autonomous warehouse robots.Yet some investors are now quite concerned that the logistics business will likely drive down the margins. SHOP stock's success so far has been due to the core business of being a high-margin, high-growth software company. As of the end of June, SHOP stock's gross margin stood at 56.57%.However, Shopify has been exhibiting contracting gross margins especially in Merchant Solutions. Furthermore, in Q2 the company's operating expenses increased by 49.9%.If SHOP management cannot keep meeting the Street's aggressive growth forecasts, then the owners of SHOP stock may become more concerned about its lack of profit, and Shopify stock could drop. Instead of focusing on profits, management wants to expand the company by launching new businesses. Therefore, those who plan to own SHOP stock over the long-term need to pay attention to the cash flows from its new ventures. The Bottom Line on Shopify StockSHOP is a growth and speculative stock. Prior to the earnings report, I expect SHOP to be a battleground between investors and traders. While long-term investors would like to see Shopify stock go over the $350 level, traders are likely to keep it between $325 and $275.In a few weeks, SHOP stock is likely to release another strong quarterly report. I'd like to analyze the statement before hitting the "buy" button.Those who have benefited from SHOP's 2019 gains may also consider taking some money of the table as we look ahead to the next earnings report. Alternatively, they may consider hedging their positions with covered call or put spreads.If the earning report is another strong one, SHOP stock is likely to go and stay above $350. If SHOP stock's quarterly report disappoints, then a move toward $250 or below could happen rather quickly.From a fundamental valuation perspective, Shopify is still too expensive for me. However, there's no doubt it's an impressive growth company.Many analysts indeed regard Shopify stock as one of the best e-commerce plays around. And it has been one of the top-performing stocks in 2019. Thus the strength of Shopify share price might be a good indication that within three or four years, investors who buy SHOP on weakness are likely to be rewarded handsomely.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Beverage Stocks to Buy Now * 10 Groundbreaking Technologies Created by Universities * 5 Semiconductor Stocks Worth Your Time The post Should Investors Buy Shopify Stock After Its Recent Decline? appeared first on InvestorPlace.
Last month, online merchant place Shopify (NYSE:SHOP) disclosed two major announcements. First, the company acquired 6 River Systems, which utilizes cloud and robotics technology to make fulfillment solutions more efficient. Second, Shopify finally allowed its merchants to sell cannabidiol (CBD) products in legal jurisdictions. In theory, both announcements should bolster SHOP stock.Source: BalkansCat / Shutterstock.com Of course, the best theories don't always pan out in real life. Due to the funds needed to secure the 6 River acquisition, investors read between the lines. While Shopify stock is very much a growth name, the underlying company has so far only produced a string of annual net losses. Therefore, the acquisition makes the premium on SHOP even more stretched.However, one could make the argument that this dynamic represents a buying opportunity for Shopify stock. Our own David Moadel did exactly that, stating:InvestorPlace - Stock Market News, Stock Advice & Trading TipsI like to think differently than 99% of investors; if they're all selling, I'm looking for a buying opportunity. When it comes to SHOP stock, I now view it not only as an investment in e-commerce, but as a stake in the cloud and robotics niches -- both of which have a bright future, in my ever-so-humble opinion. * 10 Super Boring Stocks to Buy With Super Safe Returns I respect Moadel's logic. For one thing, SHOP stock has absolutely killed it in the markets. More fundamentally, though, Shopify is emblematic of the digitalization of commerce and its disruptive capacity. Like Square (NYSE:SQ) has done for payment processing, SHOP can level the playing field for small merchants.At the same time, I don't think you can ignore context. And in my view, the current (and coming) environment doesn't bode well for Shopify stock. A Reality Check for Shopify StockWhile Moadel and SHOP bulls see longer-term opportunities, I'm more focused on the nearer-term risks. Additionally, I perceive a hint of desperation with last month's news. Let me explain:On the surface, the 6 River acquisition makes perfect sense. As a force-multiplier for the fulfillment process, Shopify can help its merchants better serve their customers. With over 800,000 global merchants, that's a sizable consumer base. Again, in theory, this should lift Shopify stock.However, it's important to ask a follow-up question: how many of the company's merchants are generating enough business to justify the 6 River acquisition? When you break down the numbers, the average gross merchant volume for SHOP's merchants averages less than $60,000.But that's just the average. Clearly, most standalone businesses can't survive on GMV of $60,000. Logically, then, an investment in SHOP stock is an investment in a relatively few core clients; the rest of them will succumb to Shopify's churn rate, which they don't publish. Go figure.In my view, management knows exactly what they're doing. They realize that currently, investors are buying on perception rather than fundamentals. That's why I'm cynical about the CBD merchant approval. Naturally, this move will boost the merchant base - and possibly SHOP stock - but what's the success rate for CBD retailers?Undoubtedly, many will succeed. But many more will surely fail. As Dr. Andrew Kerklaan, president and founder of Dr. Kerklaan Therapeutics stated, "The days of bootstrapping a start-up in the cannabis industry are quickly coming to an end, if not already over."In other words, what matters most is capital, not wide-eyed entrepreneurs with a dream. Right now, Shopify has more of the latter than the former. This is why I'm not crazy about Shopify stock at the present valuation. SHOP Stock Faces Macro HeadwindsAs SHOP states in their blog page, the appeal for the merchant place is discovery. Shopify allows small businesses to find consumers that are looking for authentic products and excellent customer service. That might work in a bull market. But heading into a possible bearish phase, I'm not sure if this business model is conducive for SHOP stock.Recent data suggests a crack in consumer sentiment. Spending growth has slowed, leading some economic experts to raise a yellow flag.And you don't have to deep dive consumer data to get the chills. Despite a trade truce, a trade deal between the U.S. and China is still far off. Plus, geopolitical tensions, particularly in the Middle East, threaten to disrupt global economic sentiment. If these factors weren't enough, our own politics is fraught with mistrust and division.Simply put, it's not a great time for companies levered to discretionary retail. Additionally, if consumers are going to buy anything in a distressed environment, they'll do so cheaply. That means companies that have the scale to provide quality goods cheaper - we're talking Walmart (NYSE:WMT) and Target (NYSE:TGT), among many others - will leapfrog small businesses that specialize in niche products.Sure, authenticity and good service matters. But when push comes to shove, it's all about the Benjamins. Most of Shopify's merchants don't have the scale, which means you should let SHOP stock cool even further.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Super Boring Stocks to Buy With Super Safe Returns * 10 Winning Stocks to Buy and Stick With for the Long Haul * Don't Give Up on These 4 Cannabis Stocks The post Donat Let the Red Ink in Shopify Stock Tempt You appeared first on InvestorPlace.
Shopify (NYSE:SHOP) stock has plateaued. SHOP had a massive run-up, as Shopify stock more than tripled in eight months. However, SHOP stock pulled back dramatically in August and has traded in a range since that time.Source: justplay1412 / Shutterstock.com Now many wonder what SHOP stock will do next. Will it retest its all-time high of $409.61 per share or will it resume its decline? Imagine the UnimaginableShopify stock is a long-term winner. However, the owners of SHOP stock have a lot to worry about in both the short and the medium term. InvestorPlace contributor Luke Lango, a SHOP bull, described the recent 23% decline since August as a normal, healthy pullback. Stocks that are in a longer-term rally commonly undergo such declines, and he may well be correct.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 A-Rated Stocks to Buy for the Rest of 2019 However, the behavior of SHOP stock could also serve as a reminder that the "unimaginable" routinely occurs in the stock market. Unfortunately, SHOP stock is poised for a massive drop if investors' sentiment turns negative.Shopify stock still trades at 330 times its forward earnings. At that level, it would have to fall almost 90% from its all-time high before it would no longer be overvalued by traditional standards.But such drops happen even to even to solid companies. In September of last year, many thought Nvidia (NASDAQ:NVDA) could do no wrong as NVDA stock climbed north of $290 per share. I can also remember when people thought the same about Cisco (NASDAQ:CSCO). At one point in early 2000, CSCO rose above $80 per share, briefly becoming the world's most valuable stock.However, NVDA stock lost about 60% in less than three months last year. Cisco would go on to lose 90% of its value over two years as the tech boom went bust. Nearly 20 years later, CSCO stock has not yet regained its all-time high. Competitors, Economy Could Hurt ShopifyBut is it possible that those who are bullish on SHOP stock will be proven correct? Of course. The unimaginable happens every day. InvestorPlace contributor and Shopify stock bull Nicolas Chahine predicts that, "the breakout in either direction will be strong." I agree with his assertion.Still, many signs indicate that SHOP stock cannot continue to trade at such high valuations. Unlike some other stocks that have broken out to the same extent, Shopify has competition. WordPress developers tend to gravitate toward WooCommerce. Adobe's (NASDAQ:ADBE) purchase of Magento has made ADBE a competitor of SHOP.Furthermore, if a recession occurs, it will probably hit the small and medium-sized business that Shopify serves will be especially hard-hit. Shopify could attract new business as unemployed workers scramble for a way to earn money. However, that turnover will create uncertainty that could lead investors to question the high valuation of SHOP stock. How to Trade SHOP StockSHOP stock could move back to its record high or even beyond.But Shopify stock looks like a bubble. Virtually no company can justify a 330 forward price-earnings ratio, regardless of its performance. Investors also need to remember that even the seemingly most solid of companies can lose almost all of their value.Despite the high price of Shopify stock, I see SHOP as a long-term winner. Even with the rising competition in the e-commerce space, businesses often choose SHOP when they want an e-commerce platform that's not tied to Amazon or other large tech firms. Although a recession could disrupt the company's growth for awhile, its business has just scratched the surface of its potential, given the explosive outlook of e-commerce. Shopify will benefit as more businesses utilize e-commerce.Unfortunately, in light of the sky-high valuation of SHOP stock, investors do not know whether these catalysts will boost SHOP stock within several days or several years. That makes SHOP too risky to buy at its current levels.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Super Boring Stocks to Buy With Super Safe Returns * 10 Winning Stocks to Buy and Stick With for the Long Haul * Don't Give Up on These 4 Cannabis Stocks The post Shopify Stock Has Become a Bubble appeared first on InvestorPlace.
Like so many other IPO stocks, Lyft (NASDAQ:LYFT) keeps falling. The LYFT stock price, just over $38, is barely half its IPO price of $72. The declines have been particularly nasty of late, with LYFT down 42% from highs on Aug. 8, the day after what looked like a solid second quarter earnings report.Source: Tero Vesalainen / Shutterstock.com Admittedly, LYFT does look intriguing here. It's easy to forget amid the carnage in recent IPOs that Q2 earnings really were better than expected. The company raised full year guidance for revenue and lowered its outlook for Adjusted EBITDA loss.Combined with disappointing results from rival Uber (NYSE:UBER), the quarter suggests that Lyft is taking market share. Meanwhile, valuation at least looks more reasonable after the nearly 50% haircut.InvestorPlace - Stock Market News, Stock Advice & Trading TipsEV/revenue of about 2.4x isn't quite as cheap as it sounds given lower margins than other tech companies valued on a top-line basis. But using "contribution margin" -- basically, adjusted gross profit -- LYFT is trading at about 6x gross profit. The combination of a single-digit EV/GP valuation and 72% revenue growth, as Lyft posted in Q2, isn't found in too many places in this market. The recent (albeit unproven) bottom in the LYFT stock price suggests at least some investors see value here.But there are problems with assuming that LYFT is a "buy the dip" candidate. I believe it might be at some point. I don't believe that point has arrived. LYFT and the Private Market ProblemMany IPO stocks this year have plunged. LYFT is down almost half from its IPO price, and UBER 36%. Chewy (NYSE:CHWY) and Peloton Interactive (NASDAQ:PTON) are underwater. Slack Technologies (NYSE:WORK), until a recent bounce, had traded almost straight down after its direct listing.The narrative has been that investors suddenly decided to stop buying unprofitable growth stocks. And trading in already-public names like Shopify (NYSE:SHOP) and Roku (NASDAQ:ROKU), plus the carnage among cannabis stocks, does suggest that valuation finally has become a point of focus.What's tempting about the narrative is that, presumably, sentiment can reverse. After all, growth has sharply outperformed value in this bull market, and after a pause, may well do so again.But there's something else going on with the recent batch of IPOs beyond just a lack of profitability. It seems increasingly clear in retrospect that the private markets that funded those companies before the IPO were in a bit of a bubble. The presence of Softbank (OTCMKTS:SFTBY) alone seems to have boosted valuations, as evidenced by its primary role in the WeWork debacle.Softbank aside, private markets saw a flood of 'dumb money' from pension funds, mutual funds, family offices, and other investors chasing the "unicorn" boom. The flood led to ever-increasing valuations, based often on relatively small equity injections.Those valuations went too far. And so the problem with a company like Lyft isn't necessarily that investors decided to knock the valuation down to a current ~$8 billion (excluding net cash). It's that the $15 billion valuation assigned last year was too high. Those late-stage investors, quite simply, didn't know what they were doing. They created false expectations that public investors would pay even more. It's now clear they won't. Two Key Questions for the LYFT Stock PriceAnd so it's a poor argument to bet on LYFT simply because it's cheaper than it was. It shouldn't have had a $20 billion-plus valuation. It's thus dangerous to hope that the LYFT stock price will follow that of Facebook (NASDAQ:FB) and Snap (NYSE:SNAP). Both of those companies saw steep post-IPO drawdowns -- which were followed by multi-bagger rallies. Lyft's inflated private valuation suggests that path is much less likely.There are two key fundamental worries. The first, as I noted after the LYFT IPO back in May, is the company's relatively modest growth in rides per user. The argument for big upside in both LYFT stock and UBER is based on the companies taking an increasing share of overall transportation. Simply splitting the existing taxi market isn't enough.Lyft didn't break out figures after Q2. On the Q2 call, CFO Brian Roberts said that rides did outpace the growth in riders. In other words, rides per user increased. But it's likely the increase was small -- or else Lyft would have been trumpeting the figure, not ignoring it.Given profitability concerns for both ridesharing companies, the increase almost certainly isn't enough. Lyft can get to profitability, but that alone doesn't support a ~$8 billion enterprise value.Those profitability concerns also go to the question I've asked about UBER: is ridesharing really a profitable model? Investors have worries. Uber's efforts in delivery and freight are one reason why I thought UBER would outperform LYFT -- and despite declines in both stocks, it has.But incremental margins in ridesharing simply may not be as high as hoped -- which means profitability may be further off, and the LYFT stock price may well have even further to fall. All told, investors looking to buy the dip need to have faith in both the model and in management.As of this writing, Vince Martin is long CHWY. He has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Super Boring Stocks to Buy With Super Safe Returns * 10 Winning Stocks to Buy and Stick With for the Long Haul * Don't Give Up on These 4 Cannabis Stocks The post Cheaper Doesn't Mean Cheap for Lyft Stock appeared first on InvestorPlace.
Shares of Okta (NASDAQ:OKTA) have been under severe pressure, as high-growth stocks are getting hammered. Whether good, bad or mediocre, these stocks are being tossed out the window. Okta stock is in that group, as shares fell 34% from peak to trough in just two months.Source: Michael Vi / Shutterstock.com It's got some investors looking for an opportunity in the name, while others are waiting for the next shoe to drop. Unfortunately, the main driver for the growth stock group may be the overall market.The S&P 500, Nasdaq and Dow Jones are no more than 5% off their highs. Should they see even moderate selling pressure -- say, down 7% to 10% from their highs -- individual stocks will likely take another beating.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOn the flip side, should the major indices push back to new highs, investors will likely feel confident enough to circle back to these names now that most of them are down 20% or more. Valuing Okta StockAfter the recent decline, we've started to see some life in this group once again. Shopify (NASDAQ:SHOP) broke below $300, then reclaimed it, rallying to around $50 per share from its lows. Roku (NASDAQ:ROKU) jumped almost 10% on Wednesday after an analyst upgrade. After breaching the 200-day moving average, Okta stock has recovered nicely as well, up about 25% from the lows. * 10 Super Boring Stocks to Buy With Super Safe Returns So, has this group bottomed? Perhaps. But I wouldn't be surprised by a retest or a near-retest of the recent lows.When we see a massive rally like we did in Okta Inc stock -- a triple from the fourth-quarter lows -- followed by a catastrophic unwind, these stocks need time to build bases. I can't say confidently whether the latest shakeout has been enough or not. However, my biggest issue with OKTA is the valuation.Last quarter, OKTA delivered a beat across the board. Earnings, revenue and management's outlook for next quarter and the full year were impressive. As such, full-year expectations now call for 41% revenue growth this year to $562.86 million.While the growth rate is impressive, we're still talking about a stock with a $14.1 billion market cap. That's 25-times current sales!Say estimates of 34% revenue growth next year are too conservative, and Okta again grows revenue past 40%, say to $800 million. That's great, but we're still talking about 17.6-times forward sales at present value.And remember, I'm no perma-bear on Okta. This was one of my favorite mid-cap stocks earlier this year. This group has performed incredibly well, even considering the big correction.On the plus side, OKTA recently turned free cash flow (FCF) positive, while gross margins and gross profit continue to surge. On the downside, it's not yet profitable and FCF is barely more than breakeven. Trading OKTA SharesOkta stock will rally eventually, but that doesn't calm investors' worries about the valuation. The question then becomes, when will names like Okta, Alteryx (NASDAQ:AYX), Veeva Systems (NASDAQ:VEEV), Shopify and others come to more realistic levels?For instance, when will the price-to-sales ratios drop from the mid-20s to the teens? Not that that's cheap, but it's at least palatable. For Okta stock, that would drop the stock about 30% from current levels, based on fiscal 2020 (this year's) sales. That would put shares more than 10 points below the September low, landing it down near $82.50. Click to EnlargeCurrently, shares are trading just under $120, as the 50-day moving average and 78.6% retracement keep a lid on Okta stock. Over $120 and OKTA may accelerate higher.If this level holds shares in check, bulls need to see the 200-day moving average and the 61.8% retracement hold as support. If they fail, the September low near $93.50 is on the table.So, is Okta Inc stock safe to buy yet?For me, I like to see huge washouts in high-growth names once they've lost momentum. Specifically, I look for reductions exceeding 40%, like we've now seen in Roku. Specifically, with Okta, I would really like to see the stock decline more before initiating it as more than a trade.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long ROKU. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Super Boring Stocks to Buy With Super Safe Returns * 10 Winning Stocks to Buy and Stick With for the Long Haul * Don't Give Up on These 4 Cannabis Stocks The post Is Okta Stock Too Dangerous to Own? appeared first on InvestorPlace.
As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the second quarter. We get to see hedge funds' thoughts towards the market and […]
Shopify Inc. , the leading multi-channel commerce platform, plans to announce financial results for its third quarter ended September 30, 2019 before markets open on Tuesday, October 29, 2019.
During Thursday night's Mad Money program Jim Cramer reminded viewers not to forget about Shopify , which investors can start accumulating as it's well off its highs. In this daily bar chart of SHOP, below, we can see that prices have come down from their highs and have stabilized around the $300 area. Prices are below the declining 50-day simple moving average line.
Shopify (NYSE:SHOP) stock is down 20% in the past month. SHOP stock slid from $389.70 at the open on Sept. 3 to $310.36 at the close on Oct. 2.Prior to that, SHOP stock had been rallying tremendously. SHOP stock nearly tripled in value from January to August. As a result, the shares reached a frothy valuation.As I wrote in my July column, "Short term, SHOP stock is a sell. A massive pullback could signal a buying opportunity to place a bet on SHOP's future prospects. But until then, investors should be cautious before chasing this growth story."InvestorPlace - Stock Market News, Stock Advice & Trading Tips * Are These 10 High-Yielding S&P Dividend Stocks Traps or Treasures? I was a little early. The shares went up another 27% before starting their retreat back down to the $300 price level.While I believe SHOP remains overvalued, I can see the stock treading water or rallying higher.But here's why I'm on the sidelines with Shopify stock: Source: justplay1412 / Shutterstock.com Will SHOP's Fulfillment Push Move the Needle?SHOP is rapidly moving into fulfillment.The company believes that will help it compete more effectively with Amazon (NASDAQ:AMZN). But fulfillment is not a slam-dunk. The fulfillment industry is a low-margin business. Since it also has high startup costs, SHOP could lose big if this bet doesn't pay off. Considering the company has yet to generate a profit from its core business, it could be getting in over its head.In tandem with this fulfillment push, Shopify is acquiring 6 River Systems. 6 Rivers provides automation solutions for warehouse/fulfillment operations. The analyst community is positive on this deal. Canaccord's David Hynes believes the acquisition can jump-start SHOP's fulfillment strategy. He remains bullish on Shopify stock, setting a $385 price target on the name.Jeffries' Samad Samana believes another strength of the deal is that it brings two former Amazon execs into the fold. But Samana remains cautious, rating the stock a "hold." Piper Jaffray's Michael Olson is also positive on the acquisition, but remains "neutral" on Shopify stock, due to its valuation.Shopify's move into fulfillment has its pros and cons. But weighing catalysts against risks, I think SHOP stock remains highly overvalued. Let's take a closer look at the current valuation of Shopify stock. Even After Its Dip, Shopify Stock Remains OvervaluedEven compared to other growth stocks, SHOP is overvalued. Shopify's trailing enterprise value/sales (EV/Sales) ratio is 26.2. Here are the 12-month trailing EV/Sales ratios for some of Shopify's peers:Amazon: EV/Sales of 3.5Etsy (NASDAQ:ETSY): EV/Sales ratio of 8.9PayPal Holdings (NASDAQ:PYPL): EV/Sales ratio of 6.9Square (NYSE:SQ): EV/Sales ratio of 6.5Wix (NASDAQ:WIX): EV/Sales ratio of 8.1Perhaps comparing Shopify stock to AMZN, PYPL, and SQ is not an apples-to-apples contrast. But even among e-commerce platforms, Shopify's valuation is high. InvestorPlace columnist Mark Hake touched on this in a recent article. He pointed out that Shopify stock trades at a substantial premium to ETSY and WIX, even when comparing their forward sales.For the fiscal year that will end in December 2020, analysts, on average, estimate that Shopify's sales will be $2.06 billion. Based on its current enterprise value of $33.9 billion, SHOP trades at a forward EV/Sales ratio of 16.4. ETSY and WIX have forward EV/Sales ratios of 6.3 and 5.8, respectively.But SHOP continues to fly high in terms of growth. As its last quarterly results showed, its revenue continues to grow at a significant clip. The growth of e-commerce is definitely not over. But does it seem smart to buy SHOP stock now, when the company is entering the costly fulfillment business?The same thing could have been said about Amazon back in the mid-2000s. Back then, there was no guarantee that AMZN could parlay its success as a bookseller into a global retail juggernaut. Only time will tell if SHOP will achieve the same success. The Bottom Line on Shopify Stock: Its Future Is UncertainShopify's core software-as-a-service business is solid. Its competitive moat will enable it to sustain high growth, as its customers accelerate their pivot from bricks-and-mortar to e-commerce. But SHOP stock is not a buy at any price. At its current valuation, Sjopify stock seems frothy. Add in the new fulfillment build-out, and its future profitability continues to be uncertain.All bets are off with SHOP. The company's next quarterly results are due to be released in November. If the company can continue to generate 30%+ revenue growth, investors could dive into SHOP stock again.But buying SHOP today could be a costly bet. The best strategy for investors is to remain on the sidelines. Once the anticipated recession occurs, Shopify could be a screaming buy. Even if its growth is challenged in a tough economy, the company's long-term prospects may make it a compelling opportunity.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Best ETFs for 2019: The Race Is a Little More Gnarly Now * 7 Next-Generation Healthcare Stocks to Buy * Are These 10 High-Yielding S&P Dividend Stocks Traps or Treasures? The post Down 20% in a Month, Shopify Stock Isn't Worth Buying Yet appeared first on InvestorPlace.
Investors are cautious about an upcoming slowdown. As expected, tech stocks like Cisco, Shopify, Alteryx, and others have led the sell-off.
It might be of some concern to shareholders to see the Shopify Inc. (NYSE:SHOP) share price down 19% in the last...