Is There Now An Opportunity In Shopify Inc. (NYSE:SHOP)?

Let's talk about the popular Shopify Inc. (NYSE:SHOP). The company's shares saw significant share price movement during recent months on the NYSE, rising to highs of US$70.29 and falling to the lows of US$30.35. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Shopify's current trading price of US$30.67 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Shopify’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Shopify

What is Shopify worth?

Good news, investors! Shopify is still a bargain right now. According to my valuation, the intrinsic value for the stock is $48.87, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Shopify’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What does the future of Shopify look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with an extremely negative double-digit change in profit expected over the next couple of years, near-term growth is certainly not a driver of a buy decision. It seems like high uncertainty is on the cards for Shopify, at least in the near future.

What this means for you:

Are you a shareholder? Although SHOP is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to SHOP, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on SHOP for a while, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

If you want to dive deeper into Shopify, you'd also look into what risks it is currently facing. You'd be interested to know, that we found 3 warning signs for Shopify and you'll want to know about these.

If you are no longer interested in Shopify, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.