Shopify surged by double digits Wednesday after the provider of e-commerce software and services hiked monthly contract prices. With the gain, Shopify stock now trades at the high end of a 5% buy zone.
Canada-based Shopify announced the 33% price hikes in a blog post late Monday. The changes take effect immediately for new merchants, while starting in late April for existing merchants. Existing merchant customers have the option to keep their current pricing by switching to yearly contract terms.
The price hikes do not impact premium "Shopify Plus" products sold in the enterprise market.
"Given the current macro backdrop and ongoing e-commerce headwinds, some may ask 'why now,' " Truist Securities analyst Terry Tillman said in a note to clients.
Shopify Stock Rebounds In 2023
He added: "We would argue that price increases have been overdue for quite some time, particularly considering the degree of platform investments and innovation made over the past decade, with effectively no corresponding price changes."
Shopify stock leapt 10.9% to close at 47.33 on the stock market today. Shares have advanced more than 30% in 2023 while forming a cup-with-handle base.
With Wednesday's gain, Shopify stock trades at the high end of a 5% buy zone. It holds an entry point of 45.16.
Also, earnings are due Feb. 15.
Meanwhile, Shopify stock plunged in 2022. Post-coronavirus pandemic growth slowed amid high investments and executive departures.
Shopify sets up e-commerce websites for businesses and partners with others to handle digital payments and shipping. The company is building a U.S. distribution network to store and ship products for its merchant customers.
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