Why Is Shopify Stock Trading Lower Wednesday?

Shopify Inc SHOP stock is trading lower Wednesday after Wedbush analyst Ygal Arounian downgraded the stock from Outperform to Neutral and raised the price target from $66 to $68. The re-ratings followed the Shopify's Investor Day.

Oppenheimer analyst Ken Wong reiterated an Outperform with a price target of $80.

Wong walked away from Shopify's Investor Day more confident that management will pursue durable growth in a disciplined manner and remain committed to margin expansion. 

Despite reducing marketing spending, the development of new merchants motivated the analyst. 

Shopify highlighted positive competitive trends, showing share gains across customer segments. 

Management listed payment penetration, new product adoption, pricing, and monetization as tailwinds to attach rate, with large enterprise volume, offline, and international as dampeners.

Wong projected Q4 revenue and EPS of $2.0 billion and $0.32.

Needham analyst Anna Andreeva reiterated a Hold rating.

Uniquely positioned at the intersection of tech and retail, SHOP is seeing its share vs. competitors almost double while focusing on efficiencies across the organization to drive durable growth. 

The analyst walked away more constructive on the long-term positive narrative on the stock; macro and valuation kept him sidelined.

Andreeva projected Q4 revenue and EPS of $2.08 billion and $0.33.

Piper Sandler analyst Clarke Jeffries reiterated an Underweight with a price target of $56.

The analyst attended Shopify's first investor day in four years, where it discussed product, strategy, and market opportunity as SHOP caps off a transformational year where growth reaccelerated and margins drastically expanded. 

Presentations reinforced the strengths and characteristics that made Shopify a leader in e-commerce with ~$7 billion in revenue powering $200 billion+ GMV - both metrics growing 50x since IPO. 

However, new disclosures offered little to incorporate in his model. Jeffries' view from last week's downgrade is unchanged.

Jeffries projected Q4 revenue and EPS of $2.08 billion and $0.31.

Raymond James analyst Brian Peterson reiterated a Market Perform rating.

The analyst noted that investors should come away from the event with a greater appreciation for the company's innovation cadence and ability to enable digitally native merchants. 

Shopify has expanded its avenues of GMV growth through PoS, Shop Pay, and Components, which should drive structurally higher GMV growth rates relative to total commerce. 

While he remains encouraged by fundamental developments over the last 12 months, valuation remains his main hangup.

Also Read: Shopify Merchants Smash Records with Black Friday Bonanza

Price Action: SHOP shares traded lower by 2.89% at $72.54 on the last check Wednesday.