Shopify stock (SHOP) is in a buy zone after the cyber Monday sales
- Shopify Q3 earnings failed to grab investors attention.
- Shopify stock experiences volatility from cryptocurrencies.
- Shopify stock is overvalued based on the higher P/E ratio.
Shopify Inc. (NYSE:SHOP) missed the analysts’ expectation in Q3 earnings, where the revenue came at $1.12 billion, below the anticipation of $1.15 billion. However, the EPS miss might be just occasional or a simple correction after a big surge in revenue.
Despite the COVID-19 market crash, Shopify stock showed an amazing recovery, with more than $500 recovery from early January to an all-time high in December. However, analysts forecast a 33.6% sales growth in 2022 from the previous forecast of 56.5% for 2021.
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Shopify supports Bitcoin as a payment method where the cryptocurrency market is subject to volatility. According to recent news, Shopify will support NFTs minting and trading that influences the stock to experience a high level of volatility.
The current P/E ratio of Shopify is 47.2X compared to the 36X industry average in the US IT sector. Moreover, the P/B ratio is also high at 14.2X compared to the industry average of 4.4X.
Is it safe to buy Shopify Stock?
This week, Shopify stock showed more than 4% gain as bears failed to hold the existing momentum below the 1285.50 key static level. However, the company expects to see the largest revenue contribution in Q4 due to the Black Friday and Cyber Monday selling period.
Technically, Shopify stock has a strong buyer interest as the recent selling pressure came from an all-time high of $1762.92. Although the current price is below the dynamic 100-day moving average, it showed an amazing recovery from the $1285.50 support level.
Therefore, the primary target of the recent bullish rejection would be $1450.00 to $533.32 area. On the other hand, a break below the $1285.50 with a bearish daily candle would open rooms for testing the $1181.57 level.