Shopify (TSX:SHOP) Down a Staggering 74.32%: Buy Now?

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Growth stocks have trended downwards for most of 2022 and much of 2021. Due to heightened market volatility and uncertainty, many investors have become hesitant to consider buying growth stocks for their investment portfolios.

Many savvy investors wait for market downturns and bearish performances from high-quality stocks as opportunities. Several high-quality growth stocks with the potential to deliver stellar long-term returns tend to trade for attractive valuations due to market downturns.

The trend for growth stocks in the tech industry has beaten down many top names and brought valuations down to more attractive levels.

Spotting and investing in the right growth stocks could deliver superior investment returns, provided you know where to look. Many growth stocks are trading for attractive valuations today, but not all of them have the potential to deliver outsized returns.

Today, I will discuss one stock you could consider adding to your investment portfolio for substantial long-term wealth growth.


Shopify (TSX:SHOP)(NYSE:SHOP) is a beaten-down growth stock that warrants more consideration than others for stock market investors seeking growth. Shopify stock trades for $549.53 per share at writing, and its current levels reflect a 74.32% decline from its all-time high in November 2021.

Shopify stock has proven itself a winner since it went public. The company has consistently increased its monthly recurring revenue for every quarter since its fourth quarter in fiscal 2016. A company as large as Shopify not reporting a decrease in its monthly recurring revenue for several consecutive quarters is a positive sign.

The e-commerce industry is booming right now. Online shopping was already growing in popularity. The onset of COVID-19 accelerated the consumer behaviour shift, making the e-commerce industry increasingly important.

Online shopping now represents a significant portion of the retail industry in North America. However, many other regions worldwide are still shifting towards a digitized economy, and there is a significant untapped market share for e-commerce giants to benefit from.

Shopify has already shown its ability to attract merchants from various parts of the world to use its platform and empower their businesses.

Shopify has recently noted that it expects its revenue growth rate to slow down to pre-pandemic levels in the coming quarters. Some investors might find such an announcement from a company alarming, but it is only natural for its revenue growth rate to slow down.

The pandemic provided a boost to the e-commerce industry. However, the factors leading to it are fading away, as the world moves into a post-pandemic era. Shopify expects its earnings-growth rate to slow down, but it does not expect to face losses.

Foolish takeaway

Shopify’s growth rate during the pandemic was never going to be sustainable. Besides, it is normal for larger companies to see their earnings-growth rate slow down as time passes. The slowing growth rate might make institutional investors slightly reluctant about the stock. It probably explains its volatility in the stock market, despite strong fundamentals.

However, Shopify managed to surpass Amazon in monthly unique visitors during Q2 2021 for the first time since it went public. It proves how massive the company has become in the global e-commerce industry.

While Shopify stock might not deliver the same returns as it did when it initially went public, it could provide substantial capital gains once it starts recovering to its pre-pandemic levels.

The post Shopify (TSX:SHOP) Down a Staggering 74.32%: Buy Now? appeared first on The Motley Fool Canada.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Amazon.

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