Shopify stock price continued rising this year and is hovering at its highest level since January 2022. SHOP has jumped by almost 400% from its pandemic low as traders focus on the upcoming quarterly financial results. Its surge has pushed its market cap to over $138 billion. So, is Shopify a good stock to buy this year?
Shopify stock price forecast
The weekly chart shows that the SHOP share price has been in a strong uptrend in the past few years. It has jumped from the 2022 low of $23 to $120. It has remained above the 50-week and 100-week moving averages.
Shopify has also formed an inverse head-and-shoulders chart pattern, a popular bullish continuation sign in the market. It is now approaching the neckline of this pattern, meaning that a bullish breakout may soon occur.
Shopify stock has also moved to the 61.8% Fibonacci Retracement point, meaning that more gains may be about to happen. It has moved to the top of the trading range of the Murrey Math Lines tool.
Shopify also remains above the Ichimoku cloud indicator, while the Relative Strength Index (RSI) and the MACD have continued rising. A strong bullish breakout will see it bounce to the ultimate resistance level at $150, up by almost 30% from the current level.
SHOP earnings ahead
The next important catalyst for the Shopify stock price will be its earnings results, which will come out on February 12.
These results will provide more color for the company and whether its growth continued in the fourth quarter.
The most recent Shopify earnings showed that its revenues jumped to $2.16 billion, up from $1.71 billion in the same quarter a year earlier. This happened as the gross merchandise value (GMV) jumped from $56 billion to $69.7 billion.
Shopify’s operating income more than doubled to $283 million, a trend that may continue this year.
Analysts are optimistic that its business continued doing well in the last quarter. The average revenue estimate is $2.76 billion, a 27% annual increase. If this is correct, and there are high chances it will, it will be the sixth consecutive quarter of over 20% revenue growth.
These results will bring its annual revenue to $8.8 billion, a 24% increase from 2023. It will then make $10.8 billion in 2025, a 22% annual increase.
Read more: Shopify stock is a better pick than Amazon: Mark Mahaney explains why
Shopify has also become highly profitable, with its annual earnings per share (EPS) coming in at $1.26, up from 73 cents in 2023. The company will then make $1.53 this year, up from $1.26.
The main concern fo Shopify has always been its pricey valuation since it trades at a forward P/E ratio of 121.2, much higher than the sector median of 31. While Shopify is highly overvalued, it will continue doing well as long as its results are supportive.
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