What happened
One day after it posted a big earnings miss, Shopify‘s (NASDAQ:SHOP) stock continued to fall in price on Wednesday. The e-commerce-solutions provider saw its shares crater by nearly 12%, as numerous analysts cut their price targets.
So what
Ultimately, it could have been declared “National Reduce Targets on Shopify Shares Day.” Nearly every major bank covering the once-hot growth stock saw fit to trim their levels.
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Among the cutters was Goldman Sachs prognosticator Gabriela Borges, who chopped her target nearly in half — to $833 per share from the previous $1,570. She’s maintaining her neutral recommendation on the stock, however.
That dynamic was similar to the adjustment made by Deutsche Bank analyst Bhavin Shah. This is now $900 but was formerly $1,400, with the hold (i.e., neutral) recommendation staying in place.
Still, plenty of Shopify bulls remain among the professional investment community. Jefferies‘ Samad Samana is one. While he trimmed his target to $1,350 from $1,800, he’s keeping his buy designation on the stock.
“[Operating and capital expenditures] will ramp dramatically over the next several years (2022-2024), limiting intermediate term profitability,” Samana wrote. However, “We remain positive as 4Q continued to show progress on our [long-term] thesis,” he added.
Now what
Such reactions were to be expected, as Shopify badly missed analyst estimates for its Q4. Collectively, those prognosticators were anticipating $1.69 billion in revenue and a per-share net profit of $1.58. The company posted $1.38 billion and $1.36, respectively. Also concerning was Shopify’s guidance — it expects 2022 top-line growth to come in below last-year’s level.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.