Shopify’s (SHOP) 10-for-1 stocks split recently did not help end the sell-off. The e-commerce platform
giant trades at an unfavorable 300+ forward price-to-earnings ratio. It has high expenses that will worry
investors.
Shopify acquired Deliverr to build its e-commerce fulfillment back-end logistics. In addition, it will spend
heavily on integrating the unit. The market does not welcome the high costs at this time. The economy
is rapidly shrinking. This will hurt Shopify’s customer business volumes. It will pressure Shopify’s margins
and revenue.
Amazon’s (AMZN) is not faring better, either. The company has too many staff at warehouses. It did not
anticipate the sharp drop in demand.
High inflation rates will persist. This cuts customer disposable income levels. Until the rising price cycle
ends, technology stocks will not rebound. Shopify is at severe risk of correcting further.
Long-term investors may increase their allocation to SHOP stock. It has a strong moat and little
competition. For now, the weak macroeconomic environment will weigh on Shopify. Investors need to
watch CPI figures in the coming month. The Federal Reserve will use CPI results as a guide to easing its
rate hike. When the tightening cycle ends, money flow will improve. This will stimulate the economy and
improve Shopify’s prospects.
