Shopify (SHOP) Shares Retreat After Sharp Surge
On 12 November, Shopify released its Q3 earnings report, which exceeded analysts' expectations:
- Earnings per share: actual = $0.36, forecast = $0.27;
- Gross revenue: actual = $2.23 billion, forecast = $2.15 billion.
The company also provided strong earnings guidance for Q4. According to Zacks analysts, Q4 earnings per share could reach $0.39.
As a result, SHOP shares surged by more than 20% following the report's release. But is it the right time to buy now?
A review of SHOPs price chart suggests that purchasing the stock under current conditions might be premature:
- The price is above the upper boundary of the ascending channel (marked in blue), whereas it has typically remained within this channel since late 2022;
- The RSI indicator signals extreme overbought conditions.
Recent price action supports the idea that the market's initial reaction may have been overly emotional, leaving the stock vulnerable to a pullback. For the first time since the report, SHOP shares closed below $105 yesterday.
While strong fundamentals underpin Shopify's long-term appeal, in the short term, the stock price could decline towards:
- The psychological level of $100 per share;
- Former resistance at $90;
- The median of the ascending channel.
According to TipRanks:
- 11 out of 18 analysts recommend buying SHOP stock;
- The average price target for SHOP is $85 over the next 12 months.
Read more: https://fxopen.com/blog/en/oa-shopify-shop-shares-retreat-after-sharp-surge/
Text source: Forex Trading Blog
