Why Shopify Stock Jumped 10% on Wednesday

Shopify (TSX:SHOP)(NYSE:SHOP) stock recovered 10% on Wednesday after Chinese markets reported strength, specifically with e-commerce.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published March 16, 2022 1:00 pm EDT

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Shopify (TSX:SHOP)(NYSE:SHOP) rallied 10% on Wednesday after the markets seemed to be in recovery mode after hitting lows this week.

What happened?

Tech stocks, Shopify stock included, climbed on Wednesday in reaction to better trading in the Asia-Pacific sector. China in particular saw the strongest rebound on the market after heavy losses, the biggest recovery since 2008. Other e-commerce companies across the ocean also jumped, including Alibaba by about 27%.

This led investors to seek out their own e-commerce growth, including Shopify stock. Shares of the tech giant fell to 52-week lows this month, down to $654. Since then, shares have made over $100, back at $761 as of writing. That’s growth of 16% in just a few days.

So what?

More positive news could be coming out soon, with the United States Federal Reserve also set to announce its latest interest rate decision. This would be the first hike since 2018 and could affect the e-commerce industry and Shopify stock. Canada had a similar reaction to its interest rate hike recently.

It’s this combination of support between the United States and China that saw a rebound in stocks, including Shopify stock. The U.S. would support U.S.-listed Chinese stocks overseas, helping keep the country’s economy and markets stable. This is especially helpful, as the country goes through a severe outbreak in COVID-19. But that alone proves why investors should continue to seek out e-commerce companies.

Shopify stock saw insane growth during the beginning of the pandemic. While restrictions may be easing and vaccination rates are up, the pandemic is far from over. It’s something we may just live with, which means e-commerce will be growing for the long term.

Now what?

Shopify stock remains focused on long-term, stable growth. Sure, investors probably won’t see triple-digit year-over-year growth in the future. But you’ll see stable revenue from subscriptions and a solid business model supported by its own in-house payments, fulfillment centres, and more.

Shopify stock is still far off from its all-time high of $2,228 per share. That would be a potential upside of 193% as of writing! Still, analysts predict share growth closer to around $1,400 per share. That alone would also see a potential upside of 84% as of writing.