Shopify is overvalued, Piper Sandler says

Not everyone seems to be caught up in the Black Friday, Cyber Monday fever.

This morning, following the report of a record Black Friday weekend haul, Piper Sandler downgraded Shopify’s (Shopify Stock Quote, Chart, News, Analysts, Financials NYSE:SHOP) stock from “neutral” to “underweight”.

On November 28, SHOP reported that Shopify merchants had hit a record $9.3-billion in sales, up 24 per cent from last year.

“Watching entrepreneurs make their first sale and seeing established brands reach new highs on Black Friday-Cyber Monday was incredible,” President Harley Finkelstein said. “Our merchants spend all year building relationships with their customers and earning brand trust. This weekend was a testament to how they consistently deliver experiences and products that global consumers are looking for.”

But Clarke Jeffries, an analyst at Piper Sandler, said Shopify is now overvalued.

“Shares have substantially outperformed this year; catalyzed by the exit of the logistics business & newfound emphasis on profitability,” he said. “The company is clearly a commerce platform juggernaut with 2M+ merchants powering $200B+ of GMV while growing top line >20%.”

But the analyst believes the stock holds an “untenable valuation” currently. As such, he Tuesday cut his price target on the stock from (USD) $58.00 to $56.00.

Shares of SHOP on the NYSE closed November 27 at $73.79.

“Macro, execution, or near-term demand are not catalysts for our rating change, but we believe fundamentals are set to moderate in 2024 as the company clears events unique to 2023,” Jeffries concluded.