Shopify (SHOP) Shares Retreat After Sharp Surge
Shopify (SHOP) Shares Retreat After Sharp Surge
On 12 November, Shopify released its Q3 earnings report, which exceeded analysts' expectations:
- Earnings per share: actual = $0.36, forecast = $0.27;
- Gross revenue: actual = $2.23 billion, forecast = $2.15 billion.
The company also provided strong earnings guidance for Q4. According to Zacks analysts, Q4 earnings per share could reach $0.39.
As a result, SHOP shares surged by more than 20% following the report's release. But is it the right time to buy now?
A review of SHOP’s price chart suggests that purchasing the stock under current conditions might be premature:
- The price is above the upper boundary of the ascending channel (marked in blue), whereas it has typically remained within this channel since late 2022;
- The RSI indicator signals extreme overbought conditions.
Recent price action supports the idea that the market's initial reaction may have been overly emotional, leaving the stock vulnerable to a pullback. For the first time since the report, SHOP shares closed below $105 yesterday.
While strong fundamentals underpin Shopify's long-term appeal, in the short term, the stock price could decline towards:
- The psychological level of $100 per share;
- Former resistance at $90;
- The median of the ascending channel.
According to TipRanks:
- 11 out of 18 analysts recommend buying SHOP stock;
- The average price target for SHOP is $85 over the next 12 months.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
On 12 November, Shopify released its Q3 earnings report, which exceeded analysts' expectations:
- Earnings per share: actual = $0.36, forecast = $0.27;
- Gross revenue: actual = $2.23 billion, forecast = $2.15 billion.
The company also provided strong earnings guidance for Q4. According to Zacks analysts, Q4 earnings per share could reach $0.39.
As a result, SHOP shares surged by more than 20% following the report's release. But is it the right time to buy now?
A review of SHOP’s price chart suggests that purchasing the stock under current conditions might be premature:
- The price is above the upper boundary of the ascending channel (marked in blue), whereas it has typically remained within this channel since late 2022;
- The RSI indicator signals extreme overbought conditions.
Recent price action supports the idea that the market's initial reaction may have been overly emotional, leaving the stock vulnerable to a pullback. For the first time since the report, SHOP shares closed below $105 yesterday.
While strong fundamentals underpin Shopify's long-term appeal, in the short term, the stock price could decline towards:
- The psychological level of $100 per share;
- Former resistance at $90;
- The median of the ascending channel.
According to TipRanks:
- 11 out of 18 analysts recommend buying SHOP stock;
- The average price target for SHOP is $85 over the next 12 months.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
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