Insiders Are Buying Shopify (SHOP) Stock. Here’s Why.

  • Multiple Shopify (NYSE:SHOP) executives are purchasing SHOP stock
  • This development is boosting SHOP after a difficult season
  • The insider buying trend could signal a turnaround after the company’s disappointing Q1 earnings report
Image of a shopping cart toy on a wooden desk carrying a mobile phone that features the Shopy (SHOP) logo on it
Source: justplay1412 / Shutterstock.com

Shopify (NYSE:SHOP) stock is up 11% today and for good reason. In the past few days, several top Shopify executives have doubled down on the company. CEO Tobias Lutke disclosed a $10 million purchase of SHOP in response to a tweet from venture capitalist Amish Jani praising his leadership.

Seeking Alpha reported yesterday that within 20 minutes of Lutke’s tweet, SHOP stock rose 3%. It would ultimately dip again, but today it is on a steady upward trajectory. According to data from WhaleWisdom, Lutke was the company’s largest shareholder as of the end of 2021. His holdings encompassed 7.91 million shares, a market value of roughly $10.89 billion.

Lutke isn’t the only member of Shopify’s executive team to invest in the company. Kaz Nejatian, the company’s vice president of member services, also tweeted that he had purchased a “significant amount” of SHOP stock, noting his investment constituted a “meaningful portion” of his family’s savings. In an emotional Slack message, Nejatian took the opportunity to explain his decision.

“At its core, Shopify is a bet that the world is wrong about entrepreneurship,” he wrote. The executive went on to note that Shopify has disproven critics who thought the company could not scale to help large merchants. He cited examples such as Allbirds (NASDAQ:BIRD) and Oatly (NASDAQ:OTLY) that used Shopify to scale operations and go public.

At the core of his message was one clear thesis: Shopify will rise again.

Who Else Is Betting on SHOP Stock?

When executives make a large investment in their company, it should signal one thing to investors. They believe in the future of the company and are willing to work twice as hard to ensure its success. Two of Shopify’s leaders are putting their money where their mouths are and making a big bet on the company they helped build.

As InvestorPlace news writer Eddie Pan noted, “tracking institutional [investment] is important, as these large funds provide liquidity and price support for stocks.” During the fourth quarter of 2021, 263 hedge funds held a position in SHOP stock, an increase of roughly 7%. This indicates that Lutke and Nejatian aren’t the only investors who are betting big on SHOP, as does the fact that the number of new positions has more than doubled, rising from 21 to 42.

As noted, Lutke is the Shopify’s largest shareholder. Let’s take a look the other largest stakeholders in SHOP stock as of Q4.

  1. Morgan Stanley (NYSE:MS): 5,884,426 shares.
  2. Baillie Gifford: 5,372,962 shares.
  3. Capital World Investors: 4,489,765 shares.
  4. Vanguard Group: 3,532,286 shares.
  5. T Rowe Price Group (NASDAQ:TROW): 3,324,595 shares.

On the date of publication, Samuel O’Brient 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.

Samuel O’Brient has been covering financial markets and analyzing economic policy for three-plus years. His areas of expertise involve electric vehicle (EV) stocks, green energy and NFTs. O’Brient loves helping everyone understand the complexities of economics. He is ranked in the top 15% of stock pickers on TipRanks.


Article printed from InvestorPlace Media, https://investorplace.com/2022/05/insiders-are-buying-shopify-shop-stock-heres-why/.

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