The Shopify Analyst
Brent Bracelin maintained an Overweight rating on Shopify shares but reduced the price target from $900 to $800, implying a 37.7 percent upside from latest closing price.The Shopify Thesis
Shopify will likely face increasing execution risks, with the macroeconomic situation primarily to be blamed, Bracelin said. An inflationary environment would pressure consumer spending, according to the analyst.Bracelin also sees a shift in consumer behavior away from products and toward services. Shopify faces tougher comparisons compared to stimulus-supported tailwinds in 2021, he added.
Shopify’s sensitivity to economic variables portends a risk, according to the analyst. He sees gross merchandise value (GMV), which accounts for roughly 70 percent of the company’s sales, to see a 16 percent quarter-over-quarter drop to $45.4 billion in the first quarter, steeper the seasonal norm of a 13 percent decline. GMV growth rates will likely moderate from 96 percent in 2020 and 47 percent in 2021 to 25 percent in 2022, the analyst said.
Bracelin attributed his bullish rating to the year-to-date sell-off seen in Shopify, which he believes partially discounts some of these risks.
“SHOP remains one of the highest quality franchises to own in commerce software with attractive prospects over the next 3–5 years powering a diverse base of 2M+ merchants,” the analyst said.
