|Bid||430.83 x 0|
|Ask||430.83 x 0|
|Day's Range||426.80 - 440.19|
|52 Week Range||159.25 - 543.76|
|Beta (3Y Monthly)||0.94|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||195.00|
Shopify Inc. (SHOP)(SHOP.TO) (“Shopify”) today announced that it has completed its previously announced offering of Class A subordinate voting shares (the “Offering“) at a price to the public of US$317.50 per share. An aggregate of 2,185,000 Class A subordinate voting shares, which includes the full exercise of the over-allotment option of 285,000 Class A subordinate voting shares, were sold by Shopify for aggregate gross proceeds, before underwriting discounts and offering costs, of US$693,737,500. Shopify expects to use its net proceeds from the Offering to strengthen its balance sheet, providing flexibility to fund its growth strategies.
Canadian e-commerce company Shopify (NYSE:SHOP) took another hit yesterday, with SHOP stock closing down 2.7%. That follows a steep drop earlier in September after the company announced the acquisition of a warehouse robotics company, and another 5.1% drop last Friday. Since its peak of $406.99 near the end of August, high-flying SHOP has dropped to $328.82 -- a decline of 19% in just three weeks.Source: BalkansCat / Shutterstock.com Is the bubble bursting on Shopify stock, or does the recent beating the company has taken make it an attractive target for long-term investors? Here's a look at what has happened over the past three weeks that has had investors souring on SHOP. 6 River Systems AcquisitionOn Sept. 9, Shopify announced it was spending $450 million to purchase 6 River systems: InvestorPlace - Stock Market News, Stock Advice & Trading Tips"Shopify is taking on fulfillment the same way we've approached other commerce challenges, by bringing together the best technology to help everyone compete … With 6 River Systems, we will bring technology and operational efficiencies to companies of all sizes around the world."The purchase of the company that specializes in robotic warehouse fulfillment solutions signaled that Shopify was better positioning itself to take on Amazon (NASDAQ:AMZN). The move bolsters Shopify's logistics capabilities, and gives member merchants access to cheaper and more effective shipping and warehousing services. In addition, with the acquisition, Shopify also lands the founders of 6 River Systems. The executives who had previously helped to develop Amazon's robotic fulfillment systems bring valuable knowledge and experience to the company.SHOP stock dropped on the news of the 6 River System acquisition, taking a 6% hit. There was a recovery over the next several days as investors mulled the long-term implications of the deal, but that was short-lived. * 10 Defense Stocks to Buy During Rising Geopolitical Tensions $603 Million Secondary Share OfferingOn Sept. 16, Shopify announced the pricing of 1.9 million class A subordinate voting shares. At $317.50 each, SHOP says the net proceeds of the offering are expected to be just over $603 million. In a press release, the company says it "expects to use the net proceeds from the Offering to strengthen its balance sheet, providing flexibility to fund its growth strategies." The market wasn't thrilled with the news, sending Shopify stock down 2.7% on Tuesday. SHOP Stock: Buy Now or Wait? After three weeks of turmoil and a 19% decline in value, SHOP stock is now cheaper than it has been in a month. Given the spectacular growth rates seen year-to-date (at least until September), does this make it a buy? Or is the bubble bursting on this Canadian company?Two InvestorPlace contributors have recent thoughts on the situation, with mixed takes. James Brumley thinks the selloff has largely run its course and the company is well-positioned for even faster growth. Meanwhile, Josh Enomoto has concerns that the sales numbers being generated by most merchants using the Shopify platform are less impressive than they sound. He also worries many of these small merchants are at risk should we hit a recession. The vulnerability of the small players that make up so much of Shopify's user base means the sustainability of SHOP's meteoric growth is questionable.Analysts polled by the Wall Street Journal also seem somewhat split on SHOP stock, with 11 of 27 currently recommending it as a "buy" and 11 having it as a "hold," although only one is suggesting clients sell their SHOP holdings. With a 12-month average price target of $368.43 they seem to feel Shopify stock still has significant upside. Although the past three weeks have shown you can expect to see a little turbulence before it gets there. 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 CBD Stocks to Buy That Are Still Worth Your Investment Dollars * 5 Stocks to Buy With Great Charts * 5 Goldman Sachs Stocks to Buy with Over 20% Upside Potential The post Why Shopify Stock Is Down Again on News of Secondary Share Pricing appeared first on InvestorPlace.
It's been a week since Shopify (NYSE:SHOP) announced the acquisition of Massachusetts-based fulfillment specialist 6 River Systems Inc. for $450 million. The move did little to move SHOP stock higher. Source: Beyond The Scene / Shutterstock.com However, if I were a 6 River shareholder, I would hold on to my Shopify stock. Here's why. A Talented AcquisitionSome acquisitions are made to acquire revenues. Others are done to obtain a particular product or service, and some are made to acquire talent. In the case of 6 River, Shopify made the acquisition primarily for the third reason with a little of the second reason thrown in for good measure. InvestorPlace - Stock Market News, Stock Advice & Trading Tips6 River is expected to generate $30 million in revenue in 2020. Shopify generated 12 times that amount in the second quarter alone. It didn't buy the Massachusetts company for its revenue. * 7 Momentum Stocks to Buy On the Dip As for the second reason: to acquire a product or service, there is no doubt that 6 River's cloud-based software and mobile robots (known as Chuck) played a part in Shopify's interest in the company. After all, Shopify's promised to spend $1 billion to build a fulfillment network in the U.S. that can keep up with Amazon (NASDAQ:AMZN). 6 River operates more than 20 facilities in the U.S., Canada and Europe, fulfilling orders for a lot of major corporations. So, yes, the second reason for making acquisitions applies. However, it is the three co-founders of 6 River, two of whom worked for Kiva Systems (Amazon Robotics), that provides Shopify with the greatest opportunity to match the logistics and fulfillment capabilities of its rival quickly. Sure, the software and robotics are important, but if it didn't get this expertise from 6 River, it likely would have found another robotics firm to fill its need. 6 River brings a management team to the table that can head up Shopify's $1 billion plan to grow its fulfillment network. It's got the people, the product, and the expertise to woo customers of all sizes. Vertical integration is what Shopify is after and this acquisition gets it one step closer. It Was Smart to Include SHOP Stock in DealThe $450 million acquisition, which is expected to close in the fourth quarter, is to be paid 60% in cash and 40% in Shopify Class A subordinate voting shares. 6 River shareholders will get $180 million in stock, $69 million (including options) of which will go to the company's three founders and its other employees. The rest to its venture capital investors. Based on its Sept. 9 closing price of $358.67, 6 River's stakeholders will receive approximately 502,000 Shopify Class A subordinate voting shares. Chances are good 6 River's VC investors will sell their shares as soon as it makes sense to generate a return for their own investors. That said, if their initial investment was in 2016 when 6 River was founded, they're still only four years in. Holding on to SHOP stock for a year or two might not be the worst thing in the world. However, the founders and employees absolutely ought to hang onto their stock indefinitely, because it is their work over the next 12-24 months that will determine the future trajectory of Shopify's market cap and enterprise value. "Shopify is taking on fulfillment the same way we've approached other commerce challenges, by bringing together the best technology to help everyone compete," Tobi Lutke, CEO of Shopify, said in its press release announcing the acquisition. "With 6 River Systems, we will bring technology and operational efficiencies to companies of all sizes around the world."With the technology and talent in-house to take Shopify's fulfillment to the next level, you can be sure this experienced team will quickly spend the billion dollars. The Bottom Line on SHOP StockTrading at 29 times sales, I'm sure a lot of experts, including some at InvestorPlace, would recommend selling at this point in Shopify's growth. I'm not one of them. Most acquisitions fail because they're done for the wrong reasons. Tobi Lutke and the rest of his management team seem to understand the value of 6 River's founders. In 3-5 years, $450 million will appear to have been a very reasonable price to pay to deliver top-notch fulfillment talent. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 CBD Stocks to Buy That Are Still Worth Your Investment Dollars * 5 Stocks to Buy With Great Charts * 5 Goldman Sachs Stocks to Buy with Over 20% Upside Potential The post The 6 River Acquisition Sets SHOP Stock up Well into the Future appeared first on InvestorPlace.
In June, Shopify (ticker: SHOP) took another step toward becoming a viable alternative to (AMZN) (AMZN) by unveiling the Shopify Fulfillment Network, which gives merchants cheaper shipping, warehousing, and picking/packaging services. Earlier this month, Shopify announced an agreement to acquire 6 River Systems, a provider of warehouse fulfillment solutions and automation robots, for about $450 million. Two founders of 6 River were previously executives at Kiva Systems, which was acquired by Amazon.com.
Prices had jumped after this weekend’s drone attack which destroyed crucial Saudi oil infrastructure. Saudi Arabia says it has already restored 50 percent of the lost production. In the U.S., Juul Labs is facing rising public outrage over teenage use of its nicotine products and a soon-to-be finalized ban on flavored products.
Shopify stock fell Tuesday on news that the company plans to raise more than $600 million in a secondary offering to strengthen its balance sheet and take on e-commerce giant Amazon.com.
Chief Operating Officer Harley Finkelstein said the company decided to raise capital to have flexibility and enable it to be more opportunistic.
The current mood surrounding Shopify (NYSE:SHOP) is a somber one. Although investors understand why the company is shelling out $450 million to acquire a warehouse-robotics outfit, the news sent SHOP stock sharply lower that day. It's since fallen a total of 17% from its late-August peak. That stumble triggered a technical sell signal in and of itself.Source: Beyond The Scene / Shutterstock.com More of the same may be in store too. Few traders want to catch a falling knife, particularly when that knife has been dropped from a great height as Shopify stock has.Nevertheless, it looks like the selloff has largely run its course. Though the SHOP stock valuation is still outrageous by most any standard, this company really is the long-term threat to Amazon.com (NASDAQ:AMZN) it's being made out to be. The bigger it gets, the faster it's going to get bigger.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Shopify Stock Hit by Profit-TakingIt's often compared to Amazon.com, and it's not an unfair comparison. At its core, however, e-commerce newcomer Shopify has earned acclaim by becoming much that Amazon isn't. * 7 Momentum Stocks to Buy On the Dip Namely, the Shopify platform allows its users to control their own storefront, rather than force them to plug into a rigid selling framework where they may have to compete with Shopify itself.To that end, Shopify is a threat to eBay (NASDAQ:EBAY).And yet, Shopify is increasingly looking like Amazon behind-the-scenes. A week ago, the organization announced it would be outright buying 6 River Systems, which develops robotic fulfillment (warehouse and logistics) solutions.Investors who had seemingly remained fans of Shopify through May, when the company announced its purchase of Handshake, balked this time around. However, it's possible the prod for this weakness was tethered more to the market's tide. It's also arguable that the big 245% seen between late last year and August of this year spurred profit-taking.Regardless of the reason, the weakness became self-fueling. SHOP stock broke under its pivotal 10-week moving average line last week, simultaneously snapping straight-line technical support that had been in place since early this year.That breakdown is a common sell signal in and of itself and traders responded in kind.But, nothing lasts forever. While Shopify stock may see more downside from here, the company is no mere flash in the pan. Amazon and eBay both have good reason to be concerned. Shopify Stock Is the Real DealValuation-minded investors are legitimately concerned. Shopify stock is trading at 28 times its trailing twelve-month revenue versus the S&P 500's average of 2.2.Shares are valued at 340 times next year's projected non-GAAP/operating earnings of 97 cents, versus the current marketwide average of 17.0. Never even mind the fact that the company is still bleeding money on a GAAP basis.This is a case, however, where the valuation is the least critical piece of trading information. SHOP stock is a story stock, with all the rights and privileges thereof. The trajectory is the key.That trajectory right now is a steep angle too. This year's revenue is on pace to improve 43.4% year-over-year, while next year's top-line growth is modeled at 34.3%. Though not GAAP numbers, next year's projected earnings of 97 cents per share is a 59% improvement on 2019's expected bottom line of 61 cents per share of SHOP.Perhaps the best argument to own a stake in Shopify, however, is the one that's most difficult to quantify. That is, the bigger it becomes, the easier it becomes for it to grow at an even faster clip.More revenue (and its ensuing cash flow) allows the organization to invest more in its own growth via deals like Handshake and buying 6 River Systems.Canaccord's analysts may have said it best in June, after the Handshake deal but before the 6 River Systems deal, noting"\:"In our view, Shopify is getting to point at which breadth of product, vibrancy of partner ecosystem, and general retail scale will enable the firm to pull away at an exponential pace."That pace has already put Shopify on a trajectory to become bigger than eBay this year, as measured by the amount of merchandise volume handled. Bottom Line on Shopify StockThat optimism certainly won't stave off a near-term selloff. Indeed, given the sheer scope and speed of the gain that took shape during the first eight months of the year, at least a little more selling could be expected from current levels.We're also at a time of year that's tough for stocks anyway, especially when it's the third year of a presidential term.Don't let the short-term turbulence distract you from the long-term story though. It could take years to fully establish a complete warehouse network that utilizes 6 River Systems' technology, just as it took years for Amazon to build its own warehouse-automation solutions.It'll be worth the wait though, and the company will certainly improve its offering in other ways in the meantime. The market's more than apt to reward incremental progress between then and now, given the strength of the back-story.Just be patient with any entry, and bear in mind one doesn't have to find the exact bottom to still make good money.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about him at his website jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Momentum Stocks to Buy On the Dip * 7 Dow Titans Breaking Higher * 5 Growth Stocks to Sell as Rates Move Higher The post Use This Lull to Get in on Shopify Stock for the Long Term appeared first on InvestorPlace.
The stock market was modestly lower early Tuesday. Dow Jones stock Home Depot declined sharply after being downgraded to neutral.
Jim Cramer disclosed his position on Shopify (SHOP) stock. He sold the stock at $388 on August 23. Cramer bought the stock for $260 per share in May.
Shopify Inc. (NYSE: SHOP ) shares are trading lower after the company priced its previously announced public offering of 1.9 million class A subordinate voting shares at $317.50 per share. Shopify is also ...
Stock futures: The stock market and Apple showed resilience as crude oil prices soared Monday. Shopify, Funko and Kraft Heinz fell late on stock-sale buzz.
Shopify Inc. (NYSE: SHOP) (TSX: SHOP) is launching Tuesday a series of new features aimed at helping merchants selling hemp and hemp-derived CBD products in the U.S. better reach customers online and in brick-and-mortar retail locations. CBD got into retail," Loren Padelford, general manager of Shopify Plus, told Benzinga. "Shopify is excited to be one of the first commerce platforms powering retailers of all sizes that want to sell hemp-derived Cannabidiol (CBD) products in the United States.
(Bloomberg) -- Shopify Inc. is introducing new features for U.S. retailers of hemp and CBD, expanding its cannabis e-commerce platform south of the border.The Ottawa-based company plans to offer tools including online store design, payment, shipping and marketing in more than 40 states to merchants of hemp-derived cannabidiol, which was legalized in December and is found in everything from skin creams to snacks.“We aren’t really getting into the CBD business, CBD is getting into the retail business,” Loren Padelford, vice president and general manager of Shopify Plus, said in a phone interview ahead of the announcement.Shopify’s platform is already widely used for online sales of recreational cannabis in Canada, where the drug was legalized 11 months ago. Government-run websites in several provinces including Ontario and British Columbia, as well as private companies like Canopy Growth Corp., Aurora Cannabis Inc. and Hexo Corp., use Shopify’s point-of-sale system.Padelford declined to say how big the cannabis business could become for Shopify, but cited a recent forecast from BDS Analytics and Arcview Market Research that the U.S. CBD market could be worth $20 billion by 2024.Shopify’s stock has fallen about 17% from its recent high on Aug. 27 as investors shifted from growth to value investments, but it’s still up 137% this year, making it the second-best performer on Canada’s S&P/TSX Composite Index.To contact the reporter on this story: Kristine Owram in Toronto at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, ;David Scanlan at email@example.com, Jacqueline ThorpeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Shopify Inc. (SHOP)(SHOP.TO), the leading multi-channel commerce platform, today announced new features on its platform to help U.S. merchants sell hemp and hemp-derived Cannabidiol (CBD) products online or in brick-and-mortar retail locations, where permitted by law. Starting today, U.S.-based retailers of all sizes can start and grow their businesses by selling select hemp or hemp-derived CBD products using the trusted commerce platform that powers more than 800,000 merchants globally.
Shares of Shopify are down 2.4% Tuesday, after they fell in after-hours trading Monday, as the e-retailer said it would offer 1.9 million Class A subordinate voting shares. The offering will be led by Credit Suisse and Morgan Stanley, which have an option on another 15% of the Class A shares if demand for the shares requires. TheStreet's Jim Cramer sold the former Action Alerts PLUS holding ahead of this week's decline.
Shopify Inc. (SHOP)(SHOP.TO) (“Shopify”) today announced the pricing of its previously announced public offering of 1,900,000 Class A subordinate voting shares (the “Offering”) at a price to the public of US$317.50 per share. The gross proceeds from the Offering, before underwriting discounts and offering costs, are expected to be US$603,250,000. Shopify has also granted the Underwriters (as defined below) an over-allotment option to purchase up to an additional 15% of the Class A subordinate voting shares to be sold pursuant to the Offering (the “Over-Allotment Option”).
Shopify Inc. shares fell sharply in after-hours trading Monday after the company announced a secondary share offering. Shares of the Canadian-based online retail services provider fell $16.94, or 5%, to $320.99 in the after-hours session. The offering will be led by Credit Suisse and Morgan Stanley, who will be granted an over-allotment option for an additional 15% of the Class A shares.
Shopify Inc. (SHOP)(SHOP.TO) (“Shopify”) today announced that it has filed a preliminary prospectus supplement (the “Preliminary Supplement”) to its short form base shelf prospectus dated August 3, 2018 (the “Base Shelf Prospectus”). The Preliminary Supplement was filed in connection with a public offering of Shopify’s Class A subordinate voting shares (the “Offering”). The Preliminary Supplement has been filed with the securities regulatory authorities in each of the provinces and territories of Canada except Québec.
In early September, we have seen a violent, significant and largely unprecedented shift in the investment landscape from momentum stocks to value stocks. Month-to-date, the iShares Momentum Factor ETF (BATS:MTUM) is down more than 1%, while the iShares Value Factor ETF (BATS:VLUE) is up more than 7%.What's happening under the hood? Long story short, investors were hyper-concerned about a recession in August. In response to rising recession fears, investors ditched economically sensitive value stocks that require a good economy to head higher, and piled into momentum growth stocks that don't require a good economy to head higher (because they have such strong secular tailwinds).In September, though, recession fears have backed off. The Federal Reserve has sounded as dovish as they've ever sounded. China and the U.S. have resumed trade talks. Long bond yields have moved higher. The curve has mostly un-inverted. In response to these easing recession fears, investors are unwinding their momentum trade. That is, they are booking profits on their momentum stocks, and buying the dip in value stocks, since these stocks should now move higher that the economic outlook is improving.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn other words, the September momentum-to-value shift is actually a vote of confidence in the economy from the equity markets.The last time a momentum-to-value shift like this happened? Mid-2016, when the global economy was in the process of shaking off slowing growth headwinds.What happens next? All stocks go higher -- momentum stocks and value stocks. Broadly, the global economy isn't going into a recession. On the contrary, conditions are improving. As conditions do improve, both value and momentum stocks will move higher over the next few quarters. * 10 Recession-Resistant Services Stocks to Buy The implication right now? Selectively buy the dip in high quality momentum stocks. Which ones are on my shopping list? Let's take a look. Momentum Stocks to Buy on the Dip: Shopify (SHOP)Source: Beyond The Scene / Shutterstock.com YTD Gain Before Selloff: Almost 200%% Off High: 15%First up, we have e-commerce solutions provider Shopify (NYSE:SHOP), which -- thanks to a near 200% gain from January to August 2019 -- has been one of the most unstoppable stocks this year. But, as we all know, there is no such thing as an unstoppable stock. Indeed, SHOP stock has been stopped recently. Over the past few weeks, the stock has shed 15% as investors have booked profits on what has been an 800% rally over the past three years.The "buy the dip" thesis on SHOP stock revolves around three things.First, the fundamentals underlying Shopify stock remain rock solid -- the company just reported (yet another) 50%-plus volume growth quarter with robust margin expansion, and the underlying decentralization and direct retail trends supporting the growth narrative remain vigorous. The only thing that has changed is the stock is now cheaper.Second, this momentum trade unwind won't last forever. It's tough to see investors selling Shopify stock and buying Rite Aid (NYSE:RAD) stock for the foreseeable future. They won't. This momentum-to-value shift is short lived, and is simply a reversion to the norm (momentum's out-performance relative to value got over-extended in the summer). Once we do get back to the norm, investors will pile back into SHOP stock because this stock is supported by one of the most robust growth narratives in the market.Third, excluding the late 2018 selloff, corrections in SHOP stock usually bottom out once they hit a 20% peak-to-trough decline. We are almost there today, so it looks like the worst of this sell-off is over. Okta (OKTA)Source: Sundry Photography / Shutterstock.com YTD Gain Before Selloff: About 120%% Off High: 24%Next up, we have cloud security and access management company Okta (NASDAQ:OKTA). Through late July, OKTA stock was up a whopping 120% year-to-date. Ever since, though, the stock has come crashing down, and now trades in bear market territory, or more than 20% off recent highs.Much like the selloff in SHOP stock, the August/September selloff in OKTA stock is a buying opportunity. The rationale? The fundamentals remain great and the optics are improving.Big picture, Okta is a hyper-growth cloud player in the secular growth identity access management market, which is essentially an identity-centric approach to data security and management. This market is very big (around $10 billion in 2018), is growing very quickly thanks to widespread cloud adoption and the mainstream emergence of IoT devices (13% compounded annual growth rate projected into 2025), and Okta is rapidly gaining share in that market (roughly 1% share in 2015, to 4% share in 2018). Assuming Okta can continue to expand share in this market thanks to its exclusive focus on cloud IAM (comps in this space have many different verticals, of which IAM is just one), then Okta projects as a big revenue grower for a lot longer.At the same time, gross margins are really high, and approaching 80%, while the opex rate is rapidly falling with revenue scale. This dynamic will persist for the foreseeable future, meaning Okta projects as big time profit grower for a lot longer, and that reality provides a favorable fundamental backdrop for OKTA stock. * 10 Big IPO Stocks From 2019 to Watch Meanwhile, as mentioned earlier, the optics surrounding big growth momentum stocks should improve over the next few months. As those optics improve, they will converge on favorable fundamentals, and ultimately spark a nice rebound rally in OKTA stock. The Trade Desk (TTD)Source: Shutterstock YTD Gain Before Selloff: Over 120%% Off High: 23%Third on this list of momentum stocks to buy on the dip is programmatic advertising leader The Trade Desk (NASDAQ:TTD). Once up over 120% year-to-date, TTD stock has come crashing down over the past few years, and presently trades in bear market territory.The next move in this stock will likely be higher for three big reasons. First, the fundamentals remain supportive of sustained long-term growth. Second, the optics surrounding TTD stock will improve going forward. Third, the stock is closing in on major technical support.On the first point, The Trade Desk is the leader in the secular growth programmatic advertising market, which entails automating and optimizing the ad transaction process by using data and algorithms. As the global economy becomes increasingly automated and data-driven, so will the global advertising world, meaning that at scale, The Trade Desk's programmatic ad platform will be a very important and relevant piece in the global ad machine.Right now, less than a percent of global digital ad spend flows through The Trade Desk's ecosystem. Thus, the runway for growth here is quite robust in the big picture.On the second point, as mentioned earlier, the momentum-to-value shift won't last forever. Once it ends -- and it should end soon -- momentum stocks will come back into favor, providing an upward lift for TTD stock.On the third point, TTD stock is rapidly closing in on its 200-day moving average, which has -- historically speaking -- provided a significant level of support for the stock during selloffs. If TTD successfully tests and holds this support level, the next move here will almost assuredly be higher. Pinterest (PINS)Source: Nopparat Khokthong / Shutterstock.com YTD Gain Before Selloff: Over 90% (from its IPO price)% Off High: 20%Another momentum stock that looks compelling on recent weakness is social media and digital ad platform Pinterest (NYSE:PINS). Pinterest went public in April 2019 at a price of $19 per share. By mid-August 2019, PINS stock had nearly doubled from its IPO price. Since, the stock has tumbled alongside other momentum names and presently trades 20% off those August highs.The bull thesis on PINS stock goes something like this. Pinterest has always been a great company. They operate a unique and differentiated social media platform that is used for visual discovery and inspiration, and which importantly: 1) has very little use-case overlap with other social media platforms, and 2) is a perfect place for ads, since consumers are going to Pinterest looking for something. Consequently, as this company just starts to ramp up its ad business, the next few years should comprise very big growth since advertisers will love the unique attention they get through the Pinterest platform.Despite all this greatness, PINS stock simply became too richly valued in August. It's now sold off -- to much more reasonably valued levels. As such, the fundamentals check out here, and imply that this selloff is a buying opportunity. * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk So do the optics, which -- as mentioned before -- should improve surrounding all momentum stocks over the next few months as this momentum-to-value shift stops. Net net, then, favorable fundamentals and optics should drive PINS stock higher from today's lows. Splunk (SPLK)Source: Michael Vi / Shutterstock.com YTD Gain Before Selloff: Over 30%% Off High: 18%Another cloud momentum stock that looks good on this dip is big data company Splunk (NASDAQ:SPLK). SPLK stock has been less hot this year than its momentum peers -- at its peak, it was up just 30% year-to-date. But, this relative under-performance in 2019 has not shielded the stock from recent momentum stock weakness. At current levels, SPLK stock trades nearly 20% off recent highs.Time to buy? I think so. Splunk is at the heart of arguably the biggest growth narrative in the market today -- data-driven decision making. Broadly, everyone and their best friend are starting to understand that data is the future of everything, since it allows individuals and companies to make better, smarter and faster decisions. Consequently, enterprises everywhere are doing all they can to get their hands on data. But, what good is data if you can't understand it, and glean actionable insights from it?Insert Splunk. This is exactly what Splunk does. They help enterprises of all shapes and sizes turn their raw machine data into actionable insights. Consequently, as companies continue to pivot into data-driven decision making processes over the next several years, they will adopt and more heavily lean into Splunk's services.The long-term implication? Splunk's revenue and profit growth trajectory will remain robust for a lot longer. As it does remain robust, SPLK stock will continue to move higher, meaning that recent weakness in the stock is nothing more than a long-term buying opportunity. Chegg (CHGG)Source: Casimiro PT / Shutterstock.com YTD Gain Before Selloff: About 60%% Off High: 26%One momentum stock that has been hit particularly hard over the past few weeks is digital education company Chegg (NASDAQ:CHGG). At one point, CHGG stock was up an impressive 60% year-to-date. That was back in late July and early August. Ever since, CHGG stock has come crashing down and presently trades more than 25% off those recent highs.This big selloff is a compelling opportunity for three simple reasons.First, nothing company-specific prompted this selloff. The last news we heard from Chegg was a double beat-and-raise Q2 print which shot the stock to all-time highs in late July. Ever since, we haven't heard anything big -- good or bad -- from the company. Thus, CHGG stock has shed more than 25% on no news.Second, the core fundamentals underlying CHGG stock remain very healthy. The company has created a connected learning platform that is rapidly becoming a necessary learning tool for high school and college students across America. Current growth rates are huge, with 25%-plus revenue growth last quarter and 30% subscriber growth. Margins are powering higher -- gross margins were up nearly 500 basis points last quarter thanks to the software pivot. The opportunity remains large -- only 3 million subs for Chegg, in a 36 million U.S. high school and college student market. Thus, broad strokes, the fundamentals underlying Chegg stock remain very good.Third, the valuation is now attractive. In late July, this stock had a near 60-times forward earnings multiple. Today, that multiple stands narrowly above 30, which is below the application software sector average forward earnings multiple. * 7 Dow Titans Breaking Higher Net net, CHGG stock looks ready to bounce back. This selloff was largely unwarranted, the fundamentals remain good, and the valuation leaves room for multiple expansion powered upside. Adobe (ADBE)Source: r.classen / Shutterstock.com YTD Gain Before Selloff: Over 35%% Off High: 11%Last, but not least, on this list of momentum stocks to buy on the dip is cloud giant Adobe (NASDAQ:ADBE). Adobe stock, which at one point was up more than 35% year-to-date, presently trades about 11% off recent highs. That matches the biggest drop ADBE stock has posted in 2019, and the second-biggest drop over the past three years.In other words, with ADBE stock, you have a winning company in the midst of its second-biggest selloff in three years. That's a compelling set-up to buy the dip.Adobe is a very good company. This company dominates the visual cloud segment, with very little competition. That's a great segment to dominate today. All content is becoming visual -- think streaming TV services, or visual-first social media apps. We live in a world where consumers love to consume visual content, meaning we live in a world where enterprises, advertisers and creative professionals have to create visual content. When those entities create visual content, they do so with Adobe -- and they've been creating more and more visual content than ever before, meaning adoption of Adobe's services is growing rapidly.Just look at Adobe's numbers for proof of this. Revenue growth has been in the double-digit range for a long time, and will remain there for a lot longer, because secular visual consumption trends are far from being over. At the same time, Adobe can get away with price hikes and huge gross margins, because there's hardly any competition in the space. Thus, this is a big margin, big growth company that will ultimately stay on a big profit growth trajectory for a lot longer.What will that result in? A winning trajectory for ADBE stock in the long run. Thus, near-term weakness in ADBE stock is nothing more than a long-term buying opportunity.As of this writing, Luke Lango was long SHOP, OKTA, TTD, PINS, SPLK, CHGG and ADBE. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post 7 Momentum Stocks to Buy On the Dip appeared first on InvestorPlace.
If there was any doubt to the power of Shopify (NYSE:SHOP) and its e-commerce business, SHOP stock removed it all. At a time when we have so many questions about the viability of the domestic and global economies, SHOP represents the bright beacon of hope. Since the start of the year, shares have jumped an astonishing 146%.Source: Beyond The Scene / Shutterstock.com Even more remarkable, Shopify stock had slowed down noticeably last year. Once the dust settled on a volatile end to 2018, shares of the upstart e-commerce firm were only up 36%. That gave ammunition to the bears -- including yours truly -- to criticize the company's business model. At the time, it also seemed like the bubble was bursting, given that SHOP stock skyrocketed 133% in 2017.Of course, I was dead wrong about Shopify stock. Part of the reason why shares have done so remarkably well in 2019 was due to the fundamentals, the very thing that bears have criticized. For example, in the company's most recent second-quarter earnings report, management knocked it out of the park.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIn terms of per-share profitability, SHOP delivered earnings of 14 cents per share. That figure easily surpassed analysts' consensus call for earnings-per-share of 2 cents. On the revenue front, Shopify rang up $362 million, besting consensus estimates for $350 million. Not surprisingly, SHOP stock flew substantially higher on the news.Additionally, the granularity was also very positive in Q2. For instance, gross merchandise volume (GMV) hit $13.8 billion, shooting Merchant Solutions revenue up 56% year-over-year to $153 million. Also, the number of merchants is over 800,000 (although Shopify didn't specify in their Q2 summary). * 10 Recession-Resistant Services Stocks to Buy All in all, that's tremendous news for Shopify stock, right? Not so fast. SHOP Stock Is a Deceptively Attractive InvestmentOn the surface, it seems you can't lose with Shopify stock. For one thing, it's levered to the broader e-commerce revolution that drove up names like Amazon (NASDAQ:AMZN). More importantly, they're demonstrating that more merchants are boarding the Shopify train.For the bulls, the below chart represents one of many reasons why they're excited about SHOP stock. Whether you're talking about the price of shares or corporate revenue or GMV and merchant count, several metrics are exercising the positive end of the vertical scale. Click to EnlargeBut while it's crucial to have the right numbers moving higher, the reality is that context matters. And this is where some of the optimistic narrative for SHOP stock dies down for me.While Wall Street toasted Shopify stock for the underlying company producing another strong earnings report, I was left wondering what they were talking about. Principally, I don't see the same sustainable growth story that has tickled the suits covering the e-commerce firm.Let's break down what we actually have here. Over the trailing year since Q2 2019, Shopify merchants have generated GMV of $49.7 billion. Although I don't have the actual merchant figure, I'm going to conservatively estimate that they have 870,000 stores. That gives me an average annual GMV per merchant of $57,126.That's probably a bit on the high end. For instance, in 2014, annual GMV per merchant was $26,061. A year later, this metric increased to $31,399. Between 2016 and 2017, GMV per merchant averaged just under $42,000. Last year, the stat registered $50,122. Click to EnlargeMy question is, what business can survive on gross sales of $50,000 a year? In the U.S., the median household income is $56,516.You're better off working for a living, which means the rally in SHOP stock is probably not sustainable. Follow the LogicOf course, calculating averages is merely an arithmetic exercise. In reality, we know that merchants can't live off of $50,000 a year. Just off the top of my head, I can think of overhead expenses and inventory outlays. These and other costs and expenses can really start eating into profits in a hurry. * 7 Hot Penny Stocks to Consider Now Logically, then, we know that Shopify gets the bulk of its GMVs from its top-tier, high-level merchants. We're talking about the names that management always brags about in their quarterly summaries, such as Unilever (NYSE:UL), Kylie Cosmetics, Allbirds, and MVMT.What about the other 869,996 merchants? Well, most of them will fail because they have to. Mathematically, if the lion's share of GMVs are produced by a handful of elite organizations, that leaves very little for everybody else. And that means, revenue sources like Merchant Solutions are threatened because they could drop off as the merchants do.Plus, if we have a recession, it's game over. There's no way that merchants making far less than $50,000 a year can compete with the scale of big-box retailers like Walmart (NYSE:WMT) or Target (NYSE:TGT).Don't get me wrong: SHOP stock can get interesting at a lower valuation. But right now, it has simply gotten well ahead of itself.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 Big IPO Stocks From 2019 to Watch * 7 Discount Retail Stocks to Buy for a Recession * 7 Stocks to Buy Benefiting From Millennial Money The post We Need to Get Serious About the Sustainability of Shopify Stock's Growth appeared first on InvestorPlace.
Square (NYSE:SQ) stock has fallen precipitously since my last analysis. Shares are down from roughly $80 per share in late July to $58.29 at the close Sept.13. With slowing growth, it's no surprise the stock has lost its mojo. But is the recent dip a sign that its time to buy?Source: Jonathan Weiss / Shutterstock.com In July I wrote about how Square stock could be a buy on a dip. However, with recent developments, I am less confident SQ stock can continue trading at such a high premium to its payment processing peers.How have things changed? Read on to see why it's best to avoid Square stock.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Sentiment Turns Bearish for SQ StockResults for the quarter ending June 30 were decent. Year-over-year adjusted revenues were up 46%. Adjusted earnings before interest, tax, debt and amortization skyrocketed from $62 million in the first quarter of 2019 to $105 million in Q2 2019. The company's Cash App business continues to scale, now generating $135 million in revenue for Q2.But investors are now writing off Square's growth potential. Adjusted revenue grew only 15% from the prior quarter. The company has built a tremendous brand with their flagship payment processing product. But in order to fuel growth, SQ needs new revenue streams to move the needle. * 7 Tech Stocks You Should Avoid Now Food ordering could have been the next frontier. The company owned DoorDash competitor Caviar. However, Square decided to throw in the towel, agreeing to sell Caviar to DoorDash for $410 million. The deal does have a silver lining, as it strengthens Square's ties to the food delivery powerhouse.Square is losing key customers. In late August, the financial press made big hay over the loss of Danish chain Joe & The Juice. This highlights Square's troubles with international growth. With U.S. sales slowing down, global growth is necessary to justify SQ stock's current valuation.Is this making a mountain out of a molehill? Joe & The Juice was likely not material to Square's revenues, but it does strengthen the bear case for Square. Square has a weak economic moat. Competitors with the capital to scale can easily steal market share.InvestorPlace's Mark Hake discussed this Sept. 12. Shopify (NYSE:SHOP) and PayPal (NASDAQ:PYPL) are inching into Square's business. Square is now playing defense. SQ is even trying to enter their respective businesses. The purchase of Weebly was obviously a play to build a Shopify-esque e-commerce platform. Cash App is Square's answer to PayPal's Venmo.With this in mind, let's see if the valuation of Square stock compensates for these risks. Despite Drop, Square Stock Remains OvervaluedSlowing growth has impacted the Square stock price. But shares continue to trade at a high valuation. Square's forward price-to-earnings ratio is 52.5. This is almost double PayPal's forward P/E of 30.3. SQ trades at a discount to PYPL in terms of its price-to-sales ratio, but enterprise value/EBITDA is another story. Square's EV/EBITDA is 718.3. This is leaps and bounds above PayPal's EV/EBITDA ratio of 40.3.But will Square stock grow into its valuation? If you take PayPal's EBITDA margin (18.3%) and apply it to Square's trailing 12-month sales ($3.95 billion), EBITDA would be $722.9 million. Apply a 40.3x multiple. This gives you an enterprise value of $29.1 billion, close to the mark of Square's current EV ($24.9 billion).There are a few caveats. With increased competition, there will be further pressure to compete on price. PayPal can easily subsidize a price war with Square. While Shopify is an equivalent size to SQ, Shopify can easily offer its e-commerce clients an in-house payment service. Growing into its valuation will not come easy.All of this makes it tough to justify the current price of SQ stock. It would be one thing if Square was the "name" in its niche. But in many ways, Square is unfortunately an "also-ran." Bottom Line: All Bets Are OffSquare stock has the potential to turn around the ship. Sales growth is slowing, but net revenue has not diminished. The company continues to make gains in the global payments marketplace. However, the recent negative sentiment is justified. In a "winner-take-all" world, even disruptors can get disrupted. Shopify is not an unsinkable ship, but it could do some damage to Square's market power. PayPal's scale brings up concerns over a potential price war.I missed the mark in my last Square analysis. I chose to stay on the sidelines, but believed SQ stock could inch higher. With growth names like Square, it's tough to predict future outcomes. For investors looking at the stock today, it's best to have the same conclusion.Square stock could be cheap down the road. But for now, the company needs leaps-and-bounds growth just to match its valuation. Things could be different when the company announces earnings again in November. But for now, steer clear of Square stock.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 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Stay on the Sidelines as Square Stock Continues to Fall appeared first on InvestorPlace.