Why Shopify Stock Is Up By 3% Today

Shopify Stock Gains Ground After Company Reports Record Black Friday Weekend Sales

Shopify stock gained upside momentum after the company reported that Black Friday/ Cyber Monday weekend sales totaled $6.3 billion globally. Back in 2020, sales during this weekend totaled $5.1 billion, so Shopify merchants were able to boost sales by 23%. On average, consumers spent $100.70 per order. Top sales were from London, New York and Los Angeles.

Shopify stock has performed well this year, gaining more than 40% year-to-date. It has recently faced resistance at all-time high levels near $1750 but found support near the $1500 level and rebounded towards $1600 as traders bet that problems with coronavirus would boost online sales.

What’s Next For Shopify Stock?

Analyst estimates have been moving higher in recent weeks. Currently, analysts expect that Shopify will report earnings of $8.16 per share in 2021 and $8.9 per share in 2022, so the stock is trading at 180 forward P/E.

The market looks ready to tolerate high valuation levels as the company continues to grow at a fast pace. However, it remains to be seen whether analyst estimates will continue to move higher at a fast pace even after the record Black Friday weekend.

While traders managed to ignore concerns about the company’s valuation, it is not clear if they will be ready to support the stock in case the broader market remains under pressure amid virus worries.

Recent trading action in former champions like Zoom and Peloton suggests that market is not ready to bet that all previous trends will remain intact in case the world faces a new wave of coronavirus.

In this light, Shopify stock comes with a risk of multiple compression, which can put material pressure on the company’s shares. At the same time, the company’s fundamental story remains strong, so the stock may return to recent highs in case the general market mood calms down.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire

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