SHOP - Shopify: Multiple Compression Should Matter In Coming Years
2024-05-05 21:34:56 ET
Summary
- Shopify's fundamentals are improving on the back of a more focused strategy and platform features which strengthen the company's competitive positioning.
- Despite this, the combination of a high valuation and moderating growth creates an unfavorable setup for future returns.
- In addition, macro conditions, such as decelerating retail sales growth, may slow Shopify's momentum in the coming quarters.
The last time I wrote about Shopify ( SHOP ) (SHOP:CA), I suggested that its fundamentals were improving on the back of a more focused strategy. Moderating growth and a high valuation have created an unfavorable setup for investors, though. The stock is down approximately 10% since then, despite strong Q4 results. This is likely to persist going forward, with Shopify's high valuation limiting the gains from strong fundamental performance....
Shopify: Multiple Compression Should Matter In Coming Years