Shopify Inc. (SHOP): Fell 16.5% post positive Earnings, Recovery?

Despite a positive earning report, Shopify Inc. shares dropped by 16.5% in February. Can they bounce back? The Ottawa, Canada-headquartered company provides the e-commerce infrastructure that connects small businesses with growing marketplaces. Facilitating merchants in marketing, managing, and selling their products. Founded in 2004, originally named Jaded Technologies, rebranded as Shopify in 2011. This rebranding helped them touch $5.5 billion in sales in 2022.

Shopify Inc. reported its Q4 earnings report on February 15, 2023. The estimated revenue was $1.652 billion, and the reported was $1.735 billion, registering a growth of 5% and a difference of $82625 million. SHOP expected this positivity would fuel the rally, but sadly the price dropped 16.5% in February 2023.

The fourth quarter revenue was 26% higher year-on-year; though it is s a strong number, it still could not pull the numbers up.

When writing, SHOP was trading at $43.40 with a gain of 5.39%, while the previous close and open were at $41.18 and $41.31, respectively. The fifty-two-week change is negative, 22.61%. The market cap is $55.404 billion; at the same time, the volume and the average volume were 16.95 million shares and 21.93 million shares, respectively. The supposed price target is $48.01, with a 10.6% upside.

The profit margin for Shopify is negative 61.79%; the operating margin is also in the negative zone of 8.49%. The company’s revenue gained 25.72% to $1.73 billion; the operating expenses jumped by 28.98% to $837.89%. The EPS dropped massively by 48.53% to $0.07, the revenue per share was $4.42, and the quarterly revenue growth was 25.70%.

Despite positive earnings, the shares dropped considerably, possibly because of some future perspective. Still, the price is above the upward-sloping trend line, which is good. As long as it keeps on the upper side, the possibility of reaching the supply zone is higher. However, the route toward the upper zone and the possibility of a breakthrough are ambiguous.

If sentiments change and it comes below the trend line, it might consolidate for a while before returning from the demand zone, as it is working as a strong support. Post its bounce, it would consolidate slightly and move north again, respecting the trend line points.

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Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing