Is Shopify stock a buy or sell as shares rise despite soft Q3 results?

on Oct 28, 2021
  • Shopify shares on Thursday spiked more than 7% after announcing its most recent quarterly results.
  • The company reported its fiscal third-quarter revenue and earnings before markets opened, missing estimates.
  • Shopify offers exciting growth prospects amid its steep valuation.

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On Thursday, Shopify Inc. (NYSE:SHOP) shares spiked more than 7% despite announcing soft fiscal third-quarter results. The company reported its most recent quarterly results before markets opened, missing the consensus for analysts estimates.

The company posted FQ3 non-GAAP earnings per share of $0.81, significantly below the average for analyst estimates of $1.23. On the other hand, revenue for the quarter grew by 46% from the same period a year ago to $1.12 billion, missing the consensus for analyst expectations by $30 million.

Shopify shares are up 33.45% this year and nearly 50% over the last 12 months.

Time to bet on Shopify growth?

From an investment perspective, Shopify shares trade at trailing 12-months P/E and forward P/E ratios of 70.30 and 141.09, respectively. Therefore, value investors may opt for more compelling options in the market.

However, analysts are optimistic about Shopify’s growth prospects, predicting earnings per share growth of more than 334% this year and an annual increase of about 30.89% for the next five years.

As a result, the stock could be an attractive option for long-term investors.

Source – TradingView

Technically, Shopify shares seem to have recently bounced off the trendline support to surge towards the trendline resistance in the intraday chart. As a result, the stock looks closer to completing an upward channel breakout, potentially pushing it above the 100-day moving average.

And, with shares yet to reach the overbought conditions of the 14-day RSI, the bull-run seems poised to continue. Therefore, investors could target extended gains at about $1,516, or higher at $1,573.

On the other hand, $1,400 and $1,338 are crucial support zones.

It may not be too late to buy SHOP stock

In summary, although Shopify shares seem to have recently spiked despite posting weak Q3 results, the stock is far from reaching overbought conditions, thus leaving room for more upward movement.

In addition, given the company’s exciting earnings growth prospects, it could be time to invest in Shopify shares.


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