Why Shopify Stock Is Down 80%
Many wonder what caused Shopify stock to drop its value by 80%. This Canadian eCommerce had its pick last year about this time. Reasonably, investors are worried about things like inflation, interest rates, supply chain, or any other market disruptions. When discussing the destiny of Shopify, we must pay attention to the impact it had on eCommerce.
One can argue that Shopify enables eCommerce to some extent because it allows a different set of services that include payment processing, web development, and much more at an affordable price.
However, after such a drop, Shopify is not expected to just wait for another era of eCommerce. We must note that Shopify does invest in the development of new services and products that can initiate further growth. Some POS devices contribute to Shopify’s journey to become a respectable actor in the offline retail zone. New refreshments will certainly help Shopify bring the good old value back.
E-commerce was blooming during the pandemic, including Shopify. However, this year has not been so kind to eCommerce businesses since their growth started slowing down. On top of that, many businesses and individuals affected by the Corona factor were paid a certain amount of money by the Governments.
That reflected the decrease in the demand of consumers, causing over-supply of money and inflation. When the economy was unblocked, the vast majority of consumers switched back to physical and in-person shopping. After the great rise in sales from 2019 to 2021, this year witnessed great losses due to that.
Further risks for investors
As mentioned earlier, there is a clear change in the climate for eCommerce businesses, including Shopify. Having the restrictions imposed by the pandemic relaxed, Shopify faced challenges.
The numbers do not go in our favor, since it is possible to recognize a drop in stock value as the pandemic was approaching its end. Once the doors of the economy opened again, investors would rather see steady progress instead of a historical drop.
Shares value remains solid
Despite the big drop in stock price, the shares of Spotify do not belong on the list of cheap shares. Shopify’s growth potential is what stands behind such a high valuation. One can argue that Shopify still has a great chance of coming back, believing in its special place within the eCommerce industry.
Are the stocks worth buying?
Drops and losses are not necessarily bad as they might seem at first. Many are quite positive and believe that Shopify’s growth rate will get back on the good track. Some of them see an opportunity to buy stocks without viewing the larger picture and the history of Shopify.
Serious investors who can look past short-term challenges might see an opportunity to get their hands on eCommerce which is dominant in the industry as well.