PreMarket Prep Stock Of The Day: Shopify

Over the past few weeks, quite a few major technology companies have retreated from their all-time high and now are attempting to rebound. One of those issues is Shopify Inc SHOP and is the PreMarket Prep Stock Of The Day.

The Company: Shopify is a Canadian multinational technology company that offers an e-commerce platform primarily to small and midsize businesses. The firm has two segments: subscription solutions (43% of fiscal 2018 revenue) and merchant solutions (57% of fiscal 2018 revenue).

Big Winner Since IPO: Shopfiy made its debut on the New York Stock Exchange in May 2015. After an initial surge to $41.11, the issue retreated and undercut its initial monthly low ($24.11) and didn't find a bottom until January 2016 at $18.48.

From that low, it began to rapidly appreciate ending 2016 at $42.87, 2017 at $101 and 2018 at $138.45. The momentum started to kick in 2019, rallying to end the year $397.59. It has gone parabolic this year after bottoming in March at $305.20, nearly tripling off that low when it peaked earlier this month at $1,146.91.

Much Needed Pullback: The issue posted its all-time high ($1,146.91) and all-time closing high that same day at $1134.32 on Sept. 1. Interestingly, that's one day before the S&P 500 index posted the same on Sept. 2.

In the three days following, the issue descended to $896.48 and revisited that low on Sept. 11, when it reached $897.50. Its lowest close for the decline was on Friday ($914.50).

Rebound Capped at $975: After such a sharp decline, the rebound off the recent low has been met with an overhead supply of sellers that are looking to take profits or mitigate losses from an ill-timed purchase and short sellers making another attempt to tame the beast. At this time, the issue has a potential double top in place from Sept. 9 ($970) and Sept. 10 ($975).

Shrugs Off Potential Dilutive News: Before the open, the company launched an offering of class A subordinate voting shares and convertible senior notes. As of 12:30 p.m. ET, the Street doesn't seem to be concerned about the offering.

After a flat open, it surpassed Friday’s ($946) and Monday’s highs ($946.88), but came up well shy of the recovery high ($975), only reaching $953 and has reversed course falling into the upper $930 handle.

Bulls in the issue want to see the rally exceed and close above the rebound high and close back in four digits. Also, those investors don't want to see a breach of the double bottom just under $900, as that could signal further declines in the issue.