Shopify’s (TSX, NYSE:SHOP) share price is having trouble rebounding from its second quarter earnings report, which makes now a potentially prime time to jump in, says portfolio manager Bruce Campbell.
Canadian e-commerce company Shopify posted its Q2 earnings on July 31, featuring a loss of $24 million or 23 cents per share on revenue of $245 million (all figures in US dollars unless noted otherwise).
And while the revenue beat (analysts’ consensus was $234.9 million) represented a healthy 62 per cent year-over-year increase, shareholders seemingly took hold of the fact that the result was off the 68 per cent growth in Q1 and 75 per cent growth for Q2/17.
In effect, shares of SHOP dropped 21 per cent over just three days of trading at the end of July and has stayed flat over the two weeks since. Shopify is still up a monstrous 43 per cent for the year, however, leaving the current slump likely representing one the rare opportunities for investors to buy in, says Campbell, president and portfolio manager at Campbell, Lee & Ross.
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“Shopify is one of those stocks that if you want an entry point, you actually hope they miss earnings here sometime,” Campbell told BNN Bloomberg. “Very high valuation — what you need is a miss, and when you get misses, then you get minus 15 or 20 (points). As long as you understand why they missed, then there may be an entry point.”
“I find it risky,” he says. “So you have to know that going into it and I would sit back and wait because there’s so much expectation built in.”
“If you own it already, that’s different,” Campbell says. “But do your homework before every quarter and make sure that the consensus is going to be on line because if they miss, there’s [going to be] at least temporarily a big drop.”