close
close

Here’s why you may want to avoid Shopify stock, even after a sale

E-commerce and payment platform provider shares (NYSE: SHOP) dropped following the company’s first-quarter earnings release this week. Is the sale a buying opportunity or a sign of potentially bigger problems to come?

Shopify’s financial results show a rapidly growing company. However, this does not mean that the shares can be purchased. The company’s market capitalization, currently around $80 billion, requires both strong revenue growth and a clear path to significant profits. This provides the former, but not the latter. Consistent and solid profitability remains elusive – a big red flag for a company with such a large market capitalization and probably a reason to avoid the stock.

The e-commerce company’s first-quarter results were solid. Total revenues in the first quarter increased 23% year over year. Moreover, after accounting for the sale of the logistics business, revenue actually grew 29% year-over-year, an acceleration from 24% growth in the fourth quarter of 2023.

Continue reading

Source: Fool.com