Shopify Investor Day Reviews Mixed, Wedbush Lowers Rating

On Wednesday, Shopify (SHOP) shares fell after its investor day drew in mixed reactions from analysts, while Wedbush lowered its rating to neutral.

Shopify stock stumbled 4.79% to $71.14 per share on December 06 due to a lack of new catalysts. Industry watchers see a further drop of 0.10% to 71.07 apiece in the following market session.

The Investor Day stressed how the Canada-based firm cut expenses while accelerating its rate of product releases. Many stakeholders were impressed by how it kept costs at a minimum despite the high inflation rate in recent months.

However, some market players emphasized a lack of long-term targets in the company’s presentation. Without defined objectives, gauging whether Shopify can perform within management’s expectations could be more challenging.

The event also highlighted priorities shifting as the business focuses on big companies with Shopify Plus premium. The e-commerce platform helps clients set up an online store and connects them with digital payments and shipping solution providers.

Its transition to prioritizing corporate entities over small sellers required significant capital. Shopify has acquired funding by selling its delivery and logistics division to Flexport in June.

Deutsche Bank analysts approved the firm’s product-centric approach geared for sustainable profitability and revenue growth. On the other hand, critics have disapproved of the lack of tangible details and emphasis on medium-term earnings.

Wedbush Sees Limited Room for Shopify’s Growth

Investment firm Wedbush Securities downgraded its buy rating to neutral, saying Shopify has curbed its options with recent decisions.

By divesting the delivery and logistics business, it has cut off its primary means of diversification.

Still, the brokerage and advisory company expressed confidence in Shopify’s ability to maintain its position as the top e-commerce platform. Nevertheless, the latter’s long-term total addressable market (TAM) is expected to peak soon, leading monetization opportunities to plateau.

Wedbush added that while Shopify may have control of the global e-commerce market, it allows competitors to catch up. The company’s Investor Day showed signs that it does not have the innovation necessary to maintain its lead in the long run.