Trading Strategies For Shopify Stock Before And After Q4 Earnings

Shopify, Inc SHOP was spiking up over 6% higher Wednesday as the company heads into its fourth-quarter earnings print after the close.

When the Canadian multinational e-commerce company printed a third-quarter EPS beat Oct. 27, the stock closed up 0.26% the following day before continuing in its uptrend, where Shopify topped out at the $45.06 mark on Dec. 2, 2022.

For the third quarter, Shopify reported an earnings loss of 2 cents per on revenues of $1.37 billion. Shopify beat a consensus estimate by 8 cents but missed the revenue estimate of $1.83 billion.

For the fourth quarter, analysts, on average, estimate Shopify will report a loss of 1 cent per share on revenues of $1.65 billion... Read more here

On Tuesday, KeyBanc analyst Josh Beck maintained an Overweight rating on Shopify and raised the price target from $45 to $55. The new price target suggests about 3% upside for Shopify.

From a technical analysis perspective, Shopify’s stock looks bullish heading into the event, having regained the 200-day simple moving average (SMA) and working to print a bullish kicker candlestick. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The Shopify Chart: Shopify reversed into its most recent uptrend on Dec. 29, which eventually allowed the stock to regain the 200-day simple moving average (SMA) as support. Shopify’s most recent higher high was formed on Feb. 3 at $54.67 and the most recent higher low was printed at the $47.33 mark on Feb. 10.

• If Shopify closes the trading session near its high-of-day price, the stock will print a bullish kicker candlestick, which could indicate higher prices will come again on Thursday. The next most likely scenario is that Shopify will consolidate sideways to form an inside bar, which would lean bullish for continuation.
• If Shopify forms another higher high following the earnings print, a pullback will be on the horizon because the stock’s relative strength index will reach into overbought territory. When a stock’s RSI reaches or exceeds 70% it becomes overbought, which can be a sell signal for technical traders.
• If Shopify suffers a bearish reaction to its earnings and falls under the $47 level, the uptrend will be a negated and a downtrend could be in the cards. If that happens, the stock is likely to find support at the 200-day SMA.
• Shopify has resistance above at $62.43 and $70.86 and support below at $51 and $40.81.

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