Shopify (TSX:SHOP) is one of the most popular stocks on the TSX. We know this because Shopify has one of the highest trading volumes of all stocks in Canada. That means investors are buying and selling shares of Shopify stock in high frequency. With that said, what should you do with Shopify stock? In this article, I’ll discuss what I think investors should do today.
Taking a look at the stock
Shares of Shopify stock are bouncing back today. As of this writing, the stock is up just a bit over 1%. However, that doesn’t come close to recovering what the stock lost yesterday. On February 13, shares of Shopify stock fell more than 13%. For outsiders looking in, or even some investors that don’t follow the company very closely, that drop could be very troubling. However, I don’t think investors should be worried.
The drop came because of weak forecasts announced by the company during its most recent earnings report. That’s kind of an interesting result because Shopify actually performed very well in the recent quarter, beating the market’s expectations.
Shopify reported US$7.1 billion in revenue for the 2023 fiscal year. That represents a 26% year-over-year increase. It’s also a larger increase than what the company reported from 2021 to 2022 (21% year-over-year increase in revenue). Shopify also reported US$782 million in operating income, which compares to a loss of US$822 million in the year prior. By all accounts, Shopify is continuing to grow its business well.
Looking at the big picture, we can see that Shopify stock continues to perform fairly well. Despite the more than 13% drop on Tuesday, Shopify stock has still gained more than 60% over the past year. Investors should focus on the big picture and not be worried about the day-to-day fluctuations that a stock may have.
How does it fit into your portfolio?
That being said, what should investors do today? In my opinion, if you’re a growth-minded investor or if you have a longer investment horizon, then Shopify is a stock you should consider buying or holding today. Shopify is a leader in the global e-commerce market and its presence in that area is nearly unrivalled.
Shopify provides merchants of all sizes with a platform and many of the tools necessary to operate online stores. As the e-commerce industry continues to grow, due to consumers becoming more and more used to the concept of shopping online, Shopify’s business could continue to grow as well.
However, I think Shopify stock could continue to be very volatile for the next few years. This could be even more true, as we’ve seen, around earnings time. If you’re the type of investor that can be easily unsettled by double-digit drops in value, then it may be wise to lock in some of the returns you’ve generated already.
