Shopify stock price is ripe for a bearish breakout
Shopify’s (NYSE:SHOP) stock price has been on a steep downtrend in recent months as investors react to the company’s slow growth. The shares are trading at $353, about 80% below the 2021 high. Its market capitalization has fallen from over $210 billion to $44 billion currently.
fall out of favor
Shopify, like other fast-growing tech stocks, has seen a remarkable drop over the past few months. Shares of the company have fallen from over $1,766 to $353 currently.
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The main reason for this performance is that analysts expect the company’s growth to slow as demand for e-commerce solutions declines.
The company has seen the number of new merchants slow while the number of buyers has also slowed. In the most recent quarter, the company’s revenue of $1.2 billion was about $36 million below analysts’ expectations. Likewise, its earnings per share missed by 45 cents.
During the quarter, its subscription solutions grew just 8% to $344 million, while its merchant solutions revenue grew 29% to more than $858 million. The company also moved into the logistics sector by acquiring Deliverr.
All in all, Shopify has done relatively well in recent years. Its total revenue has grown from over $2.9 billion in 2020 to over $4.6 billion in 2021. Its profits have grown from over $319 million to over $2.9 billion. dollars.
Additionally, Shopify has lagged due to the ongoing inflationary pressure that has affected most retail and e-commerce businesses. Last month, companies like Target, Walmart and Kohls warned of the state of the industry. Since most Shopify merchants are small businesses, it’s likely they were hit harder.
Shopify stock price prediction
The Shopify stock price is likely to rebound in the long term. On the daily chart, we see that stocks have moved below the 25 and 50 day moving averages. It also formed a bearish pennant pattern, which is usually a bearish sign.
Although the MACD has formed a bullish divergence, it is likely that the stock will experience a bearish breakout. If this happens, the next key support level will have a short-term bearish breakout. If that happens, the next level to watch will be at $300.
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