Shopify broke out of a cup-with-handle base Wednesday, but the breakout didn't progress as shares of the e-commerce player reversed Thursday below the buy point.
Shares climbed Wednesday as e-commerce stocks got a boost from news that U.S.-China trade talks had a "framework." But Thursday's new threat of tariffs sent some stocks lower. As an IBD 50 Growth Stock To Watch, Shopify gave back all of Wednesday's 3.5% gain and was down around 3.7% Thursday.
The IBD 50 stock was Wednesday's IBD Stock Of The Day.
Shopify's platform helps businesses set up websites to sell products online, manage inventory, handle digital payments and ship orders. The e-commerce software and services provider uses artificial intelligence in its assistant named Sidekick, available in 20 languages.
Shopify stock ranks No. 2 out of 120 stocks in the Computer Software-Enterprise group, which holds the 40th spot out of the 197 industry groups tracked by Investor's Business Daily.
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Shopify Stock Back Below Buy Point
Shopify stock reached the 112.38 buy point of an early-stage, deep cup-with-handle entry Wednesday. Shares were in a 5% buy zone up to 118, before fading below the entry Thursday morning.
The stock got a lift last month on news it would be added to the Nasdaq 100 on May 19. Shares have been riding up their 21-day exponential moving average since that boost. Shares have lagged other high performers with a year-to-date gain of 4%.
Sales Growth Remains Consistent
Canada-based Shopify topped first-quarter sales estimates on May 8. The company's adjusted profit growth decelerated t0 25% from 86% four quarters ago. Forecasts show second-quarter earnings growth slipping to 11% then declining 1% in the third quarter before improving.
Its first-quarter sales rose 27% and averaged 26% over the last eight quarters. Projections call for second-quarter revenue to rise 24% then ease to 19% over the next four quarters. Its full-year 2025 earnings are expected to rise 11% in 2025 and 28% in 2026.
Shopify's IBD Accumulation/Distribution Rating of B indicates moderate institutional buying over the last 13 weeks.
Mutual funds have added shares for the last eight quarters, according to IBD Stock Checkup. Nine funds on the IBD Mutual Fund Index hold shares of Shopify stock. JPMorgan Large Cap Growth Fund owns a hefty 8.69 million shares while Fidelity Contrafund holds 4.5 million shares.
The large amount of high performing mutual fund ownership earned it a Sponsorship Rating of A, according to MarketSurge data.
Lastly, Shopify stock boasts a Composite Rating of 98 out of a best-possible 99 from IBD. It also holds a 95 Earnings Per Share Rating.
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