Shares of Shopify (TSX:SHOP) got pummelled on an awful Wednesday for the broader tech markets. Undoubtedly, it wasn’t just a bad day for markets; it was a bloodbath, especially for the biggest semiconductor winners of the first half of 2024. Mega-cap tech (think the so-called Magnificent Seven companies) also took a massive punch to the face.
As to whether the damage is the start of something uglier remains the trillion-dollar question. A correction would not be out of the ordinary. However, with many hard-hit tech plays already in a correction (that’s a 10% drop from peak levels), questions linger as to whether it’s time to buy or if it’s a better idea to wait things out. The 2022 market selloff dragged on for months on end.
So, there are situations where it’s less than timely to be a net buyer of cheap stocks after a big drop.
Shopify takes a plunge; sees past-year gains get wiped out
Indeed, the start of tech earnings season has been pretty lacklustre. And with more mega-cap tech quarters coming in the next two weeks, perhaps there’s never been a more jittery time for investors, many of whom have been planning their exits for the last few months. Indeed, it’s a scary time to be a tech investor. However, if you’re young and are willing to hold for the next five-10 years, I’d argue that Wednesday’s decline is more of an opportunity and less of a panic inducer.
That said, if you’re a retiree, you’ve probably already hit the panic (and sell) button. In any case, I don’t view the more than 3% plunge in the Nasdaq 100 as horrifying. It’s a long overdue breather and one that I think will be soon forgotten as investors start looking to the unfairly punished names, which may very well start skating out of the penalty box before month’s end!
Canadian e-commerce tech darling Shopify was caught up in the horrendous decline, shedding around 5.2% on the day. At $81 and change per share, Shopify looks intriguing for those willing to brave the ugly stock chart! Though shares of SHOP are up around 27% from 52-week lows, they’re down around 33% from 52-week highs. Moreover, the stock is down over 61% from its 2021 all-time highs.
Time to buy the dip in Shopify stock?
It’s tough to time a bottom in the free-falling name, but I still think Shopify is worthy of nibbling right now if you’ve been meaning to buy the dip but have felt a bit of analysis paralysis amid the latest correction in the name.
I view a good level of support in the low-$80 range, but if such a range is broken through on the downside, I’d not be shocked to see SHOP stock fall closer to $70 per share. In any case, I’m a big fan of Shopify’s growth plan as it seeks to strike bigger deals with larger firms.
Indeed, Shopify has thrived with smaller businesses. However, after the recent partnership with American retailer Target, I believe Shopify has an opportunity to explore growth with some heavier hitters.
