PreMarket Prep Stock Of The Day: Shopify

One discernible trend this earnings season has been that if companies miss, they either bounce immediately or get punished.

Shopify Inc SHOP is adhering to that trend, making it the PreMarket Prep Stock of the Day.

Shopify Goes The Wrong Way Ahead Of Report: Long before its fourth-quarter report, the e-commerce stock was in a steep decline following its all-time high of $1,762.92 in November. 

On Jan. 23, the issue leaked into triple digits and has been unable to recover. Until Wednesday’s price action, the low for the slide was made on Jan. 24 at $780.

Some investors were leaning the wrong way into the report, as the issue followed the broad market higher Tuesday, adding $42.05 or 4.7% to close at $889.50.

Shopify's Disastrous Q4 Report: Before the open Wednesday, the company reported quarterly earnings of $1.36 per share, which missed the analyst consensus estimate of $1.58 by 13.92%. This is a 13.92 percent decrease over earnings of $1.58 per share from the same period last year.

The company reported quarterly sales of $1.38 billion, which missed the analyst consensus estimate of $1.69 billion by 18.34%. This is a 41.14% increase over sales of $977.74 million in the same period last year.

PreMarket Prep's Take, Early Price Action: When the issue was being covered on the show Wednesday, it was already deep in the red by $50 at the $840 area. “If they do not say something on the conference call, it is going to continue lower,” said co-host Dennis Dick. 
The issue is more of “a stay at home play, as opposed to a reopening play,” which works against it, he said. 

The author of this article noted the step-down sellers in the issue but underestimated the slaughter that would be forthcoming. The recent low of the move was noted at $780 as well as the next monthly low from last June at $702.02.

Shopify Plunges In Regular Session: The issue continued to make new lows for the session, with the current one being $720 as of 2 p.m. EST. At this time, it is attempting to rebound, trading down 17.31% at $734.80. 

The discussion on Shopfiy from Wednesday’s show can be found here:

Photo courtesy of Shopify.