One discernible trend this earnings season has been that if companies miss, they either bounce immediately or get punished.
Shopify Inc (NYSE:SHOP) is adhering to that trend, making it the PreMarket Prep Stock of the Day.
Shopify Goes The Wrong Way Ahead Of Report: Long before its fourth-quarter report, the e-commerce stock was in a steep decline following its all-time high of $1,762.92 in November.
On Jan. 23, the issue leaked into triple digits and has been unable to recover. Until Wednesday’s price action, the low for the slide was made on Jan. 24 at $780.
Some investors were leaning the wrong way into the report, as the issue followed the broad market higher Tuesday, adding $42.05 or 4.7% to close at $889.50.
Shopify's Disastrous Q4 Report: Before the open Wednesday, the company reported quarterly earnings of $1.36 per share, which missed the analyst consensus estimate of $1.58 by 13.92%. This is a 13.92 percent decrease over earnings of $1.58 per share from the same period last year.
The company reported quarterly sales of $1.38 billion, which missed the analyst consensus estimate of $1.69 billion by 18.34%. This is a 41.14% increase over sales of $977.74 million in the same period last year.
PreMarket Prep's Take, Early Price Action: When the issue was being covered on the show Wednesday, it was already deep in the red by $50 at the $840 area. “If they do not say something on the conference call, it is going to continue lower,” said co-host Dennis Dick.
The issue is more of “a stay at home play, as opposed to a reopening play,” which works against it, he said.
The author of this article noted the step-down sellers in the issue but underestimated the slaughter that would be forthcoming. The recent low of the move was noted at $780 as well as the next monthly low from last June at $702.02.
Shopify Plunges In Regular Session: The issue continued to make new lows for the session, with the current one being $720 as of 2 p.m. EST. At this time, it is attempting to rebound, trading down 17.31% at $734.80.
The discussion on Shopfiy from Wednesday’s show can be found here:
Photo courtesy of Shopify.
