Wedbush downgraded Shopify to neutral following the e-commerce firm's investor day, citing a lack of new catalysts. SHOP stock has soared 116% in 2023 but traded down on Wednesday as the investor day won mixed reviews from Wall Street analysts.
"We see limited room for further multiple expansion, and without incremental catalysts emerging from the investor day, we are lowering our rating to neutral," said Wedbush analyst Scott Devitt in a report about Shopify's New York City event on Tuesday.
Devitt cited "increased confidence in (Shopify's long-term strategy and competitive positioning) as the company continues to win share of merchants and share of global e-commerce. However, our view of the long-term TAM (total addressable market) and monetization opportunity remains unchanged following the event."
On the stock market today, SHOP stock fell 4.8% to close at 71.14.
SHOP Stock Investor Day: Mixed Reviews
"The investor day highlighted how Shopify has significantly reduced expenses while increasing the velocity of product releases," said William Blair analyst Matthew Pfau in a report. "Although this feat has been nothing short of impressive, we believe Shopify has some more cards up its sleeve. The company did not provide any long-term targets (which were not expected given management's comments on its last earnings call)."
Canada-based Shopify sets up e-commerce websites and partners with others to handle digital payments and shipping. Also, the company targets big companies with its premium-priced Shopify Plus services.
Recently, Shopify sold its delivery and logistics business to Flexport, easing Wall Street worries over rising capital spending.
"We come away from Shopify's investor day better appreciating how the company's product-centric culture should lead to sustainable market leadership, revenue growth and profitability," Deutsche Bank analyst Bhavin Shah said in a report.
"While the event itself was light on tangible details around attach rate and profitability over the medium term, we believe investors are pleased to learn how Shopify is leveraging its product-centric ethos internally."
Shopify stock holds a Relative Strength Rating of 96 out of a best-possible 99, according to IBD Stock Checkup.
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