Why Shopify Stock Just Surged 6%


What happened

Shares of the e-commerce giant Shopify ( STORE 6.37% ) fell 12% on Monday as traders took advantage of a 52% four-day rally in the stock price.

Ark Invest CEO Cathie Wood took the selloff as a signal to dive back.

Image source: Getty Images.

So what

Publicly disclosed trading activity data from ARK Invest shows that on Monday, as everyone was selling Shopify, Wood was buying his shares by hand for the Ark Fintech Innovation ETF. Over several hours of frantic trading, it picked up 32,635 Shopify shares, deploying nearly 1.5% of the fund’s assets to take advantage of traders’ short-term trading swing.

As a result of the move, Shopify stock now represents 2.6% of Ark’s overall holdings – and Shopify stock has become the 11th most-held stock in its combined portfolio.

Now what

Did you enter those numbers? As everyone sold, Wood more than doubled his position in Shopify stock from 1.2% of his various funds’ total assets to 2.6% — in a single day. This seems a remarkably bullish signal for growth investors following Wood’s investment moves.

It might even be the right decision. I admit – with Shopify down over 40% in the last 52 weeks, but still pegged by analysts to see a profit growth rate of over 50% over the next five years, I was tempted to nibble on the stock myself. That being said, with Shopify trading for 190x free cash flow and over 200x forward earnings, the valuation still seems too rich for my blood.

This is a Shopify-ing spree that I won’t be on.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.


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