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Shopify: Encouraging Signs, But A Tough 2H Ahead

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  • Shopify reported a mixed quarter with solid revenue growth, but the company missed analyst estimates.
  • The e-commerce platform completed a 10% staff reduction but still plans to grow employees for the year.
  • The company forecasts more operating losses in the 2H of the year, highlighting how the business was mismanaged following a period of strong growth.
  • The stock isn't appealing at 6x sales with large operating losses, but Shopify appears to have bottomed at $30.
  • This idea was discussed in more depth with members of my private investing community, Out Fox The Street. Learn More » 

How a stock trades after disappointing results is just as important as the actual results in the short term. Shopify (NYSE:SHOP) has had a bad week with discussions of major layoffs and a big Q2'22 earnings miss, yet the stock held prior lows. My investment thesis is a lot more constructive on the stock following the kitchen sink quarter, but the stretched valuation leaves the view at Neutral.

Read the full article on Seeking Alpha. 

Disclosure: No position mentioned. Please review the disclaimer page for more details.  


Update - August 11
An analyst that doesn't just follow the trend, but a $46 PT on a $41 stock isn't a Buy.

-Atlantic Equities turned constructive on Shopify Inc. (SHOP) at its current trading level with an upgrade to an Overweight rating from Neutral and a new price target of $46.

-Analyst Kunaal Malde said Shopify remains a high-quality market share gainer and the firm now sees upside to estimates following the recent reset.

-Malde has a good track record on SHOP having downgraded the stock in early January before the 60% drop in share price.

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