Is Shopify Plunging Into A Tech Wreck This 2022?

Who said Shopify was immortal? Well, we’re starting to think otherwise.

It’s only the first quarter of the year but the ecommerce industry is seeing this powerhouse platform tank about 18% midday trading. Shopify has a forecast of their growth revenue to dip into 57% compared to the numbers they achieved in 2021. 

Is Shopify Revenue Going To Get Any Better?

In their fourth-quarter earnings report, the company has expressed that they do not expect the same lockdowns and other COVID-19 related responses to repeat this year. Although by the second half of 2022, Shopify expects its growth and revenue to start gaining momentum.

Let’s backtrack just a little to Shopify’s 2021 fourth-quarter results. Due to the pandemic, there was a skyrocket in terms of merchants using the ecommerce platform. Now, users have doubled since the year 2019. Back in 2021, Shopify has also begun to integrate its platform with TikTok, Spotify, and other tools to make systems and processes more efficient for users. 

Aside from that, Shopify has also released its Shop App which not only challenged Amazon but has been said to contribute to the growth of the platform. 

Is Pushing For Shopify Still A Good Idea This 2022?

John O’Connel, a portfolio manager from SHOP has expressed that entrepreneurs might want to think twice before seizing opportunities in Shopify this year. 

While Shopify’s growth profile has been impressive, they’ve begun to note a couple of observations from the powerhouse marketplace recently:

Here’s an insider trading report on Shopify Management – insiders sell their stock worth $10 to $15 million every day. While this isn’t a bad investment and people have been building a huge sum of profit because of this, there have been management changeovers and turnovers from time to time.  

Shopify is in the middle of a pullback which has caused a tremendous stir. As per O’Connel, this has little to do with Shopify itself but more about the market turning away from growth stocks. This comes with the threat of rising interest rates this year. 

Shopify: Firing On All Cylinders

Without a doubt, Shopify appears to be firing on all cylinders this year. Their earnings are slightly down compared to their previous year’s Q3. Although, this idea seems like a tough comparison as last year came along with the heat of the pandemic. Thus, entrepreneurs were flocking Shopify’s platforms and building their online storefronts despite the lockdown. 

While Shopify is a very valued company with its trades at high valuations, entrepreneurs should think twice about the bigger purpose of growth in the middle of disrupted stock prices. 

A valuable pro-tip from O’Connel: Entrepreneurs should be mindful about allocating money with companies like Shopify that have high growth, high valuation, and are immensely innovative. 

The Bottomline

While a pullback seems likely, there is still a chance for Shopify to outperform the broader market. The platform still has room for continued revenue growth as merchants increasingly turn into the platform for business.

Some may see that Shopify has a strong business that will outlast this short-term volatility. But how about you? What do you think?