Right now, it appears shares of Canada’s largest company by market capitalization, Shopify Inc. (TSX:SHOP)(NYSE:SHOP) are taking a bit of a breather. Down more than 10% from the company’s 52-week high it reached earlier this year, Shopify might be an attractive target for growth investors right now, given the dip we’ve seen in recent trading days with a lot of these names.
Shopify has been flocked to by the masses due to the company’s impressive suite of e-commerce products delivered through a platform used by a range of businesses. Once thought to have a tremendous amount of downside risk due to the pandemic hurting the company’s revenues from small and medium sized enterprises (SMEs), it turns out Shopify has been able to post some pretty impressive numbers during this period of carnage. The shift many retailers have been forced to make toward e-commerce solutions has been essential to their survival.
Accordingly, the thesis around Shopify has become stronger. The switching costs now have increased, and the game has changed. This has positioned Shopify well in the minds of many investors. I think these catalysts are strong, and do have the potential to propel this stock higher this year.
That said, I’ve been cautioning investors for a very long time on the valuation this stock has demanded in the market. This is not a cheap stock. In fact, its valuation is extraordinary right now. I would recommend investors interested in Shopify size their position appropriately based on their risk tolerance level and diversify accordingly.
Invest wisely, my friends.
