Shopify Inc. is drawing good reviews from Wall Street analysts after its fourth-quarter results. Yet the stock is getting pummeled anyway.
(Bloomberg) — Shopify Inc. is drawing good reviews from Wall Street analysts after its fourth-quarter results. Yet the stock is getting pummeled anyway.
A dozen analysts boosted their Shopify price targets Thursday, lifting the Street’s average target by 6%. The shares were down 15% to $45.42 at 2:51 p.m. in New York, the biggest intraday decline in more than six months. It’s the worst-performing stock in the S&P/TSX Composite Index.
Shopify guided investors to expect revenue growth in the “high teen percentages” for the first quarter, a little bit below expectations. That has divided analysts on whether the forecast is “conservative”, as DA Davidson’s Gil Luria wrote, or “soft”, in the words of Roth MKM analyst Darren Aftahi.
If the guidance is simply management being cautious, the company should be able to beat its forecast, according to some analysts. “Our view is that Shopify is being conservative due to macro concerns and seasonality,” CIBC Capital Markets analyst Todd Coupland said in a report to investors. Coupland has a Street-high $65 target on the shares.
Soft guidance, however, may imply more headwinds for a business that weighed heavily on Canada’s benchmark index in 2022. Shopify’s 73% plunge last year made it the biggest drag on the TSX Composite last year — by far.
Thursday’s drop carved more than 80 points off the key Toronto index, pulling it into the red, down 0.14%.
(Updates share price)
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