Why This Shopify Analyst Says It's Time To Sell The E-Commerce Stock

Why This Shopify Analyst Says It's Time To Sell The E-Commerce Stock

In October, Shopify Inc SHOP reported an earnings beat for the third quarter.

Yet there is near-term risk to the company’s revenues and long-term risk to its profitability, according to UBS.

The Shopify Analyst: Kunal Madhukar initiated coverage of Shopify with a Sell rating and $30 price target. 

The Shopify Takeaways: Street consensus estimates for the company’s gross merchandise value and revenue do not seem to be derisked for a recession in the first half of 2023, Madhukar said in an initiation note.

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“Our surveys suggest Amazon's Buy with Prime could be a significant risk to SHOP's top line LT, especially to the extent its Payment solution, which is half of SHOP's revenue, gets disintermediated,” the analyst said. 

“SHOP's initial guide of $1B of capex in 2023/24 is unlikely to stop there as it tries to build a retail OS, vs AMZN that has invested over $150B on retail (primarily on logistics) in the past 20 years, which could impact FCF,” he added.

SHOP Price Action: Shares of Shopify were trading down 0.65% late Thursday morning. 

Photo via Shutterstock. 

Posted In: Kunal MadhukarUBSAnalyst ColorPrice TargetInitiationTop StoriesAnalyst Ratings