Shopify (NYSE:SHOP) is in a world of hurt on the New York Stock Exchange. This is not entirely its fault. While the shopping platform is essential for independent businesses, shareholders are suffering for two reasons. Amazon.com (NASDAQ:AMZN) posted weak e-commerce revenue, sending shares down by 14.05% on Apr. 29, 2022. Second, Nasdaq (NASDAQ:QQQ) broke below the $320 support and closed at a new low. Bearish sentiment is overwhelming the technology-heavy index. The selling volume intensified in the latter half of April. This unwound the market’s two-month-long attempt to bounce back. What does all this mean for SHOP stock?
Shopify will post quarterly results on May 5, 2022, before the market opens. The stock could move either way. Investors may wait for Shopify’s revenue growth figures before committing to a bullish position. Conversely, speculators may buy short-term option calls or puts, betting on a huge price swing after the earnings report. Whichever action readers choose, investors will scrutinize Chief Executive Officer (CEO) Amy Shapero’s commentary on Amazon’s competitive pressures. The e-commerce market will continue to overtake brick-and-mortar businesses. Shopify needs to attract top engineering talent. Otherwise, it risks letting Amazon hire them.
CEO Shapero will update investors on the Shopify Fulfillment Network. This service stores merchant inventory and fulfills orders. Shopify is shifting the model to larger capacity hubs. It wants to bring them in-house. This enables Shopify to control quality and realize lower costs. Investors are unwilling to pay a premium on technology stocks that face severe margin pressure. The company will unify its network using a warehouse management system. That will lead to two-day delivery coverage for over 90% of the U.S. population.
Skeptical investors are not acting as if Shopify will meet its targets. They may miss out. Shopify recently traded close to a 52-week low. Sentiment could reverse quickly to the upside after the upcoming quarterly earnings report.
On the date of publication, Chris Lau 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.
