Shopify Stock Plummets After Dismal Earnings Report

SHOP is looking to add to its 65% year-to-dat deficit

Deputy Editor
May 5, 2022 at 9:27 AM
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The shares of Shopify Inc (NYSE:SHOP) are plummeting this morning, last seen off 14% at $429.19 this morning, after the e-commerce concern posted adjusted first-quarter earnings of 20 cents per share -- well below Wall Street's 64 cent per share estimate. In addition, the firm's revenue fell slightly below expectations, and a cautious outlook was issued as pandemic-related growth takes a hit. In sperate news, the company is set to make its largest-ever acquisitions, buying delivery startup Deliverr in a $2.1 billion deal.

Pacing for its second-worst daily percentage drop of 2022, Shopify stock is set to add to its 65% year-to-date deficit. Since its Nov. 19, all-time high of $1,762.92, SHOP has trended lower, with the 50-day moving average capping more recent rallies.  

Analysts have yet to comment, though the brokerage bunch was split on the stock heading into today. Of the 28 in coverage, 13 considered SHOP a "hold" or worse, while 15 said "buy" or better. What's more, the 12-month consensus target price of $870.38 is a 79.3% premium to last night's close. All of this indicates analysts could hit the stock a round of downgrades and/or price-target cuts in the near future.

Short sellers, meanwhile, have been building their positions. Short interest rose 25.3% in the last two reporting periods, yet it now makes up a slim 3.9% of the equity's available float, or slightly more than one day at its average pace of trading. 

There's been a penchant for bearish bets in the options pits of late. In fact, over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Shopify stock's 10-day put/call volume ratio of 1.01 stands higher than 89% of readings from the last 12 months. This means puts have been picked up at a much quicker-than-usual pace in the last two weeks.




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