Shopify doubled in 2023. What’s next?

As 2023 winds down, most investors have done well. But shareholders of Shopify (Shopify Stock Quote, Chart, News, Analysts, Financials TSX:SHOP) had a banner year, posting more than a double.

At press time, Shopify on the TSX was $103.84, good enough for a 113 per cent gain. Not a bad year indeed.

What will 2024 bring for SHOP stock? Analysts covered by Cantech Letter are mixed on that question.

Most recently, RBC analyst Paul Treiber on December 6 bumped his price target on SHOP to (US) $100 (SHOP on the NYSE closed at (US) $74.72 on December 5.

“Shopify has made numerous and at times controversial changes to its business over the last year (logistics divestiture, headcount reductions, mgmt. changes),” the analyst said. “At the same time, growth and profitability have increasingly exceeded expectations. Shopify’s investor day provided data points to better understand the drivers of the company’s recently improved performance and importantly laid out how it intends to sustain a high pace of innovation and execution going forward.”

Also on December 6, ATB Capital analyst Martin Toner broke his multi-year bullishness on the stock, downgrading it from “Outperform” to “Sector Perform”

“On December 6, given the low return to our target price, we changed our rating on Shopify from Outperform to Sector Perform for the first time in our three years covering the company. While the top of funnel data provided at the investor day implied accelerating GMV and merchant growth, it did not cause a change in our forecasts, which already call for significant growth. Our DCF looks for compound annual growth rates (CAGR)s for GMV and revenue of 15.6% and 20.1% through 2032, respectively. We estimate GMV of $838bn in 2032 and an attach rate of 3.54%, up from Q3/23 TTM GMV of $221bn and an attach rate of 3.04%,” the analyst explained.

Over at Piper Sandler, analyst Clarke Jeffries November 28 said SHOP was 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 said he believed the stock held an “untenable valuation” currently. As such, he 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.

On November 2, Shopify posted its Q3, 2023 results, earning (US) $718-million on revenue of $1.7-billion, a topline that was up 25 per cent over the same period a year prior.

“Our third quarter results demonstrate the progress we are making to further solidify Shopify’s position as the global leader in commerce,” CEO Harley Finkelstein said. “Our ability to help our merchants succeed in any economic environment by delivering innovative product solutions has not only built strong trust with our merchants, but has positioned Shopify for sustained growth and profitability for the future. As we look forward to the busiest shopping season of the year, we’re confident that our unified commerce platform empowers our merchants with the tools they need to seize every opportunity and achieve greater success.”