Shares of Shopify Inc (TSX:SHOP)(NYSE:SHOP) have been very volatile over the past month. After flying to more than $1,200 per share, they’ve been falling ever since and last week they closed at under $1,000. A big problem for Shopify investors is predicting how much higher the stock can go.
While Shopify’s done a great job of growing its business, it may be difficult to justify buying it at its current price tag given that it wasn’t too long ago that it was the highest valued stock on the TSX, ahead of Royal Bank of Canada (TSX:RY)(NYSE:RY). And with a valuation of around $116 billion, it’s tough to see the tech stock climbing a whole lot higher.
Shopify’s continually risen in price over the years but at some point it’s going to run into some resistance. And right now, it’s looking like the $1,000 mark may be a tough level to stay above. While Shopify’s reached much higher than $1,000, it hasn’t stayed above there for long. It was only in May that the company’s stock reached that level after surging due to its impressive first-quarter results.
Now that the dust has settled, some of that excitement has waned and many investors have cashed out some pretty enormous profits along the way.
It’s tempting on jump aboard the bandwagon but given that a recession’s likely just around the corner, people will have less money to spend on Shopify or anywhere else for that matter. That’s why there may not be a whole lot more upside for the stock and it definitely looks like the recent peak Shopify hit at around $1,200 could be a ceiling, at least for the foreseeable future.
