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.

Check out other analyst stock ratings.

“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. 

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorPrice TargetInitiationTop StoriesAnalyst RatingsKunal MadhukarUBS
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!