SHOP Stock: Shopify Bears bet on the losing side


I wrote two articles today, one on IBM (NYSE:IBM) and the second on Shopify (NYSE:STORE) Stock. My opinion of the two couldn’t be more different. I have very little faith in IBM’s turnaround efforts. On the other hand I have Completed faith in the brilliance behind the stock SHOP. Shopify’s growth rates are extremely impressive. It’s an action to bet on.

Source: Beyond the Stage /

Total revenue has grown 20-fold since 2015 – from $ 205 million to over $ 4 billion in the past 12 months – and I challenge any critic to find fault with that. This probably explains why the stock price has seen such a steep rise.

What’s also impressive is that the company’s 12-month net profit rate is over $ 3 billion. The 2020 global shutdown likely artificially boosted growth rates. Either way, I bet they’ll make the most of it and keep the momentum going.

It’s not a cheap stock, with its price-to-sell ratio of 46. However, it doesn’t have to be cheap, as windfall budgets probably couldn’t afford this rapid growth. They really follow in Amazon‘s (NASDAQ:AMZN) footprint. These are great shoes to fill in because Amazon is one of a kind.

Bullish stock market thesis is bulletproof

Shopify stock chart (SHOP) showing the consolidation zone

Source: Charts by TradingView

Sometimes a stock’s bullish thesis is so obvious that it should have absolutely no sellers. However, Wall Street likes to negotiate on the edges, and there are always hopeful enemies. Over the long term, the charts suggest that buyers are in full control of the price action. SHOP’s stock drops had hidden buyers at all important support levels. Until that changes, bears shouldn’t expect long negative stents.

If the stock market is higher going forward, so is SHOP. However, in the last 30 days it has corrected almost 10%. Fortunately, this came from a recent explosion at an all time high. This year alone it has already reached new heights twice, and both times have fallen back to breaking lines. Nonetheless, this choppy price action is trending upward.

Therefore, the bulls always have full control, even on shorter-term charts. There is immediate support of almost $ 1,400 per share. There is even stronger support $ 100 lower. If for some reason this fails, there could be a dash towards $ 1,100. While not my prediction, a Wall Street crash could happen. Therefore, investors who want to buy stocks now should not bet everything. Smart money near historic highs always leaves dry powder in the sidelines.

Equity support vs. extrinsic risks

Shopify shares consolidated sideways for months at the start of this year. So if they fall back into this area, it will serve as a support for them. It is unreasonable to expect lower prices without a Black Swan that drastically breaks the markets.

We have an extrinsic risk of the omicron version of Covid-19 to name just one. Also recently, we have seen US Fed Chairman Powell balk at persistent inflation. Then there’s the global shutdown as well, but if that happens again it’ll probably give SHOP a boost. Businesses will then rush again to get online even faster.

Regardless, the management of the company is strong and has earned the trust of Wall Street. Having a good reputation helps the stock a lot. Anyone who short sells SHOP stocks on a fundamental basis takes a very low odds bet. It is expanding its services to find new sources of income, just like Amazon has done. This is especially true when they already have a cash cow. Betting against them is an unrealistic expectation.

At the date of publication, Nicolas Chahine did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to the publication guidelines of

Nicolas Chahine is the Managing Director of


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