• Shopify is a perplexing stock, down big for the year but also seeing some recent gains.
• Amid the rumbling, the main issue for SHOP stock is soaring consumer inflation.
• This is an interesting idea at current levels but buyers may want to wait for additional confirmation.

A sure candidate for one of the most perplexing publicly traded companies so far this year, e-commerce platform Shopify (NYSE:SHOP) has left many observers scratching their heads. Overwhelmingly, the print on the charts has been negative, keeping prospective buyers of SHOP stock on the sidelines. At the same time, this week’s volatility draws speculative interest.

After Monday’s plunge, Tuesday’s rebound and yesterday’s decline, SHOP stock is down almost 50% on the year. That is quite a haircut, psychologically satisfying from a numerical sense but utterly devastating financially. But then, you have the performance over the trailing five days.

True, the March 21 session was a train wreck, hemorrhaging over 12% of market value. But over the trailing five days, SHOP stock is still up more than 13%, an incredibly respectable figure. Which then raises the question, will the real Shopify please stand up?

Inflation as the Hefty Tax on SHOP Stock

If you haven’t driven for a while — and if you’re a white-collar worker, this might well apply to you — it’s possible that you haven’t quite felt the impact of soaring consumer inflation until just recently. Well before Russia’s senseless decision to invade Ukraine (thereby upsetting the modern global order), spiking costs of living impeded many households. Still, at the time, gasoline prices were on the high side of expected norms.

Today, I’ve seen prices that I never realized would arrive — not without a serious loss of confidence in the dollar. Back in my part of town, I saw gas prices creep up near $7 before settling closer to $6. Still, even with this “discount,” it’s major sticker shock. I know many other households feel the same.

Under the circumstances, SHOP stock faces tough obstacles. While Shopify is not in the business of pumping gas, rising fuel costs affect products that need to move from one place to another… basically everything. In turn, merchants on the platform must raise costs to keep the lights on.

At the same time, many if not most of the products on Shopify are not geared toward indispensables. Therefore, it is much easier for consumers to say goodbye to their Shopify addictions rather than to bid adieu to say toilet paper or toothbrushes.

Insiders Feeling Shaky About Shopify

Before investors start to overly get negative on SHOP stock, we must remember that e-commerce as a concept was among the top beneficiaries of the coronavirus pandemic. Per data from the U.S. Census Bureau, online sales represented 12.9% of all retail sales during the fourth quarter of 2021. That’s a significant magnitude higher than the 11.4% seen just before the crisis.

Particularly as SHOP stock has proven me embarrassingly wrong in the past, I’m not about to issue an overtly negative take on the underlying company. More importantly, the convenience of connectivity-based solutions suggests that more people overall will be interested in e-commerce, not fewer.

Nevertheless, not every cycle will be favorable to SHOP stock — and it appears that its insiders agree. Overwhelmingly, the transactions of key executives, employees and investors have been to hit the exits, not the other way around.

According to data from Marketbeat.com, the last insider buy occurred in December 2015. To be fair, you shouldn’t base your entire investment decision on one tool or metric. Further, insiders sell for a variety of reason that don’t necessarily impugn the viability of the underlying business.

However, that so few are buying SHOP stock tells you the real story. From the estimation of insiders — you know, the people closest to the business — believe that it’s better to acquire cash than hold SHOP shares. How could that not be a cautionary interpretation?

A Future Opportunity

Although SHOP stock has been taking it on the chin lately, over the long run, investors have reason to be generally optimistic. Beyond the angle of the convenience of e-commerce, consumer behaviors overall have changed.

For instance, people no longer gravitate toward mainstream entertainment centers to provide amusement to the masses. As you know, folks are increasingly turning to social media, turning everyday folks into social influencers and global superstars. In other words, technology decentralized entertainment.

Similarly, technology will decentralize various consumer product segments. Shopify is one of the major brands that are facilitating the distribution of products coming straight from the source (as opposed to some nameless faceless multinational corporation). This dynamic appeals to millennials, who value authenticity in their purchasing decisions.

Eventually, SHOP stock appears poised to be a winner. However, that time may not be right now.

On the date of publication, Josh Enomoto did not have (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.