Despite beating earnings and revenue expectations, Canadian online retailer Shopify (NYSE:SHOP) is deep in the red today. SHOP stock is down 18% at the time of writing after the company shared bleak year-over-year (YoY) revenue growth expectations for 2022. Shopify price predictions are all over the place today as investors weigh the latest earnings call.
Is now the time to get in on SHOP?
For all intents and purposes, Shopify reported a fairly strong earnings call. The e-commerce brand reported earnings per share (EPS) of $1.38 with 41% revenue growth to $1.38 billion. This trumps expected EPS of $1.30 and predicted revenue of $1.34 billion.
Unfortunately, this isn’t all the company had to report in its earnings call. Citing reduced demand from waning pandemic protocols, Shopify expects YoY revenue growth to fall behind 2021’s numbers. Indeed, Shopify believes its rapid growth in 2021 stemming from the lockdown will taper off this year. “We do not expect the COVID-triggered acceleration of ecommerce in the first half of 2021 from lockdowns and government stimulus to repeat in the first half of 2022,” the company said.
Shopify plans on increasing its marketing investments to increase customer growth, in addition to a renewed focus on its Merchant Solutions program. Shopify assists small businesses in setting up online commerce websites, as well as business lending. The company expects the program will undergo tremendous growth in 2022, more than double subscription solutions revenue growth YoY.
Despite Shopify’s various strategies to ensure long-term revenue growth and strong quarterly numbers, SHOP continues to fall. Let’s see what some analysts think about the company’s potential.
Shopify Price Predictions
Today’s drop comes as some analysts cut price predictions, though many are still well above Shopify’s current $728 price point. Roth Capital analyst Darren Aftahi is one such example after chopping his price target from $1,650 to $1,400. “We continue to view Shopify as one of the leaders in e-commerce, but with the likelihood of Covid trends beginning to dissipate, including those mentioned by Shopify’s management team, we have begun to see multiples compress, even more so from ‘stay-at-home’ beneficiaries,” Aftahi told clients.
Morgan Stanley analyst Keith Weiss recently maintained his “Equal-Weight” rating for Shopify. Weiss highlights the company’s potential for revenue growth and sustainable Gross Merchandise Value durability. Morgan Stanley set a $1,150 price target for Shopify.
Barron’s panel of 32 analysts are also bullish on Shopify. They set an average price target of $1,453 per share, for an overweight rating.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
