Shopify (NYSE:SHOP)

Shopify (NYSE:SHOP)(TSE:SHOP) stock fell over 22% since the e-commerce company announced its fourth quarter financial results on February 15. The company maintained a cautious outlook and forecasted that increased expenses would hurt its profitability. This didn’t sit well with investors. However, D.A. Davidson analyst Gil Luria sees this pullback as an entry point into SHOP stock. Luria turned bullish about SHOP’s prospects and upgraded it to a Buy. His price target of $50 implies 20.71% upside potential.

The analyst is bullish about Shopify’s subscription revenues, which he expects to gain a boost from recent price hikes. In addition, Shopify’s strong competitive positioning and large addressable market are positives for the stock.

Along with Luria, Cathie Wood also remains bullish about Shopify. Wood’s ARK Invest (ARKK) has bought about $35 million worth of SHOP stock.

Shopify’s investment in its e-commerce platform has weighed on its near-term margins. However, these investments position it well to capitalize on the digital shift in the long term.

Is Shopify a Buy, Sell, or Hold?

After underperforming in 2022, Shopify stock has recovered a bit this year. However, the recent selloff erased most of its gains. Shopify stock has received 10 Buy, 18 Hold, and three Sell recommendations for a Hold consensus rating. Meanwhile, the analysts’ average price target of $47.83 implies 15.48% upside potential.

While analysts overall remain sidelined, hedge funds and insiders have reduced their exposure to SHOP stock. In addition, Shopify has an Underperform Smart Score of one.