Shopify Inc. (STORE) proved to be a force to be reckoned with at the start of the pandemic. When businesses were frantically looking for a way to boost their online presence and thus stay open, the e-commerce platform stepped in.
Now, with pandemic restrictions removed in much of the world, Shopify‘s contribution to the global landscape looks somewhat diminished. However, Shopify may have a plan here, and it’s focused on one of the biggest potential new investment tools: non-fungible tokens (NFTs).
I’m bullish on Shopify. Although its price per share is out of reach for many retail investors, the potential for the company to improve from there is solid.
Shopify’s last 12 months showed steadily increasing earnings from March 2021 to November. However, the arrival of the Omicron variant of COVID-19 sent Shopify rapidly heading downhill along with the rest of the technology, despite the company’s position as a pandemic benefactor.
Shopify lost more than half of its value in the following period between November 2021 and March 2022.
However, the latest news could help Shopify recover. Reports note that Shopify’s NFT software suite is currently in beta. In turn, this suggests that a release may be imminent. Shopify is set to offer both minting and selling NFT tools, which would allow users to create and post their own NFTs to sell, thus getting the big investment volumes relatively early.
The Taking of Wall Street
When it comes to Wall Street, Shopify has a moderate buy consensus rating. This is based on 13 buy ratings and 14 hold ratings given over the past three months. The average Shopify price target of $988.63 implies an upside potential of 64.54%. Additionally, SHOP’s analyst price targets range from a low of $800 to a high of $1,500 per share.
The Shopify review at a bargain price
The current Shopify stock price, which is currently $600.84 apiece, will likely scare off most small investors. However, don’t be scared of the high price. There’s a lot of upside potential in this stock thanks to its latest move and what we’ve already seen from the company.
Of course, Shopify’s huge expansion and speculative days may be behind it, as most businesses migrated to an online space in the early days of the pandemic. When it became necessary to operate online, Shopify made it happen for many small businesses.
Shopify’s earnings report showed a business starting to decline. It has been falling since last November and growth projections for 2022 are significantly lower than those for 2021. Admittedly, comparisons are particularly difficult these days.
2021 was unique in that there were still many 2020 restrictions in play, but not all of them. People were able to go out and shop again, but many were apprehensive about doing so. Physical retail began a meteoric recovery, and most of those who wanted to make the leap online had already done so. This left Shopify with less room to grow and resulted, at least in part, in lower projections.
It doesn’t help that Shopify is facing declining interest from hedge funds and insiders. Insiders have sold more than $51 million worth of stock in the past three months. Hedge funds lost 229,100 stocks over the same period.
It’s worth noting here that Cathie Wood’s Ark fund bought Shopify for over $9 million earlier this week. Additionally, Shopify has yet to announce a dividend for shareholders, so investors should bet entirely on growth.
However, it’s a plus for Shopify right now. As expensive as Shopify stock is, the stock price is not only well below average, it’s also well below the lower targets. The current share price is also almost a third of the highest targets. While hitting the highest target is a vain hope right now, even hitting the lowest target represents a nearly 20% gain.
Shopify’s growing push to enter NFTs may or may not materialize. However, even without a major boost from NFTs, Shopify is still strong enough to generate this kind of share price boost on its own.
Shopify will undoubtedly scare off many retail investors. However, there is still plenty of room for growth with Shopify. Sure, the pandemic-inspired accelerated digital migration has already happened, but that’s why Shopify is already looking for new ways to monetize its platform.
The company’s stock price has been falling for months now. This creates a potential opportunity for investors to come back for any further gains. NFTs may not be the best star to hang on to, but market growth over the past few months suggests a possibility.
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