Shopify (SHOP)
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Shopify (NYSE:SHOP) is a pandemic darling stock that has been a volatile e-commerce play.
The company is up by almost 300% over the past five years but is down by over 60% from its all-time high. Shopify represents the highest potential gains out of the companies on this list since it carries an $83 billion market cap. The stock would have to grow by more than 10x to join the trillion dollar club.
The stock certainly has enthusiasm behind it, as it has nearly doubled in 2023. Tesla experienced several rips and sharp declines before reaching the $1 trillion milestone.
Shopify still exhibits strong top-line growth as evidenced by a 25% year-over-year revenue increase in Q1 2023. Rising costs and an excessive valuation hampered the company and caught up with the stock in 2022, but 2023 has been a different story.
Leadership’s efforts to reduce costs in 2023 have put Shopify back to profitability and are responsible for the stock’s recent rally. Shopify completed its sale of Shopify Logistics to Flexport and trimmed its workforce to reduce costs and fuel a surprise profit in Q1 2023.
Lower costs will elevate profits and lead to a more appealing P/E ratio. While the valuation remains high, Shopify’s move to profitability and high revenue growth suggests the stock can rise higher in the years ahead.
On this date of publication, Marc Guberti has positions in AVGO and SHOP. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Marc Guberti is a finance freelance writer at InvestorPlace.com who hosts the Breakthrough Success Podcast. He has contributed to several publications, including the U.S. News & World Report, Benzinga, and Joy Wallet.
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