Shopify stocks (NYSE:SHOP) have gained nearly 17% in the past week (five trading days) as investors once again embraced technology and growth stocks, following strong results from tech majors like Alphabet and also expecting inflation to cool. with energy and raw material prices falling. However, Shopify’s recent revenue report for the second quarter of 2022 was quite weak. Revenue grew about 16% year-over-year to $1.3 billion, a significant slowdown from the 57% growth the company posted in the same quarter of last year as demand for e-commerce tools increased. the business slowed significantly as customers returned to brick-and-mortar retailers with Covid-19 easing. Shopify reported an adjusted net loss of $38.5 million compared to adjusted net income of $284.6 million in the same quarter last year as Shopify’s R&D spend and marketing expenses continued to rise despite the revenue slowdown. Now, Shopify predicts that its losses in the third quarter could be even greater as the company continues to invest in building its own distribution network, while also battling a weak macro environment.
While there are several headwinds for Shopify in the near term, we think the stock looks pretty attractive at its current level of around $40 a share. The stock continues to fall about 70% so far and is now trading at about 7.5x expected revenue in 2022, down from a 20x range
We value Shopify stock at about $50 a share, about 25% higher than the current market price. To see Shopify Rating: Is SHOP stock expensive or cheap? for more details on Shopify’s valuation and Shopify Revenue for more details on the company’s revenue streams and how they are trending.
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