Shopify Stock Offers New Entry Amid Expected 715% Earnings Growth

Shopify Class A

Shopify Class A





Analysis of MICI stocks

  • The stock widened above a buy point off a cup with handle in early May
  • Stocks bounce off the 21-day line and move above a trendline
  • Analysts expect the company to post a 715% profit gain for fiscal 2023

composite score

Industry group ranking

Emerging model

Mug with handle

* No real-time data. All data displayed was captured at 12:27 p.m. EDT on 06/06/2023.

Shopify (SHOP) is the IBD stock of the day as it bounces higher, providing a new entry into the process.


The Canadian company is setting up e-commerce websites for small businesses. It also partners with others to handle digital payments and shipping.

Current earnings are less than ideal, but future earnings should rise, with analysts expecting a mammoth growth of 715% in 2023, according to data from MarketSmith.

Shopify stock is actionable as it bounces off its 21-day line and moves above a trendline, breaking above its recent high of 61.49. Shares jumped 6.2% to close at 63.66 trading today.

It also works on a new base, although it is slightly too deep to qualify as a flat base. More conservative investors may choose to see how this develops.

IBD Stock Of The Day offers entry

SHOP has made good progress since surpassing a buy point of 49.86 from a mug with handle in early May. Despite recent progress, he still has a long way to go before he closes in on his all-time high of 176.29, which he set in November 2021.

Strong overall performance helped Shopify stock earn a near-perfect IBD composite score of 98.

Stock market performance is its major asset. SHOP’s relative strength rating is 97, which places it in the top 3% of stocks by price performance over the past 12 months. It is also up about 75% since the start of the year.

Earnings performance is the Achilles’ heel at the moment, with Shopify’s EPS rating reaching 60 out of 99. But earnings growth is seen as robust going forward. In addition to the 715% EPS growth seen in fiscal 2023, Wall Street expects 66% growth in 2024.

Analyst backs Shopify stock, cites AI

A strong performance helped Shopify stock to rank on the list of best stocks in the IBD ranking.

CFRA analyst Angelo Zino rates Shopify stock as a buy with a target of 68. He praised the company’s decision to drastically cut spending and divest its logistics business. Artificial intelligence initiatives are also seen as possible catalysts.

“We like greater Shopify Payments penetration as well as AI initiatives,” he said in a May 27 research note. “We believe subscription revenue, about a quarter of sales, will be supported by higher pricing (effective January for new customers and April for existing customers) should support higher revenue going forward.”

The company announced the sale of its delivery and logistics business to Flexport when Shopify’s earnings were released in May. The sale price for the transaction was not disclosed.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more growth stock analysis.


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