Shopify (NYSE:SHOP) stock is down 11% today in what can largely be considered collateral damage.
The e-retailer and growth stock is taking it on the chin after growth stock bellwether Netflix (NASDAQ:NFLX) reported its first drop in paid subscriptions in a decade. NFLX stock is down 35% on the day.
Of course, Netflix and Shopify operate in two entirely different lanes. Netflix is the granddaddy of streaming services stocks, having pretty much conquered the space years ago when it drove Blockbuster pretty much out of business. But streaming services have become much more competitive in the last two to three years, and Netflix stock is starting to show some fatigue.
Shopify, meanwhile, operates a cloud-based e-commerce platform that caters to small and medium-sized businesses who want to sell their wares online. The company’s platform allows businesses to do everything from sell, manage products, process orders and payments and analyze sales trends.
Like Netflix, Shopify had a big year during the Covid-19 pandemic when people were locked down and brick-and-mortar stores were forced to shut down. So, it’s no surprise that Shopify is one of the stocks that is hurt when Netflix’s giant fall today.
SHOP stock is next expected to report quarterly earnings on May 5. In its most recent report, Shopify posted fourth-quarter revenue of $1.38 billion, an increase of 41% from last year. Adjusted gross profit was $700.6 million, gaining from $510.6 million from the fourth quarter of 2020.
So far this year, SHOP stock is down 60%, including a drop of 30% over the last month. Piper Sandler analyst Brent Bracelin on Tuesday lowered his company’s price target for Shopify from $900 to $800 per share.
Bracelin wrote in a research note that SHOP faces challenges from inflation, a shift in consumer behavior that favors services over consumer goods, and difficult comparisons to 2021 financials.
However, he said the company’s YTD drop “partially bakes in rising execution risk” for SHOP stock, and that the company is one of the best names to own in commerce software.
On the date of publication, Patrick Sanders 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.
