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Bear of the Day: Shopify (SHOP)

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Shopify (SHOP - Free Report) has been hanging out in the netherworld of the Zacks Rank lately because 2021 earnings estimates took an 8.5% dive from about $7.00 to $6.40 in Q4.

We won't have the final report card for FY'21 until mid-February, but what's interesting to me as a Shopify fan who wants to buy the stock again near $800 is that 2022 EPS estimates are holding steady around $6.92.

The disclaimer here is that this represents only 8.3% earnings growth after a spectacular 2021 where they put up +60%.

But this explains why some institutional investors have been selling the stock. You can't support a 100+ times P/E multiple on flatish growth.

The glass half-full view is on the topline where the projected consensus surge over $6 billion will represent 33% growth.

At a market cap of around $110 billion now, that means SHOP is more affordable than it has been in a while on a price-to-sales metric.

Even though the sales growth slows from 2021's blistering +56%, we are trading under 20X again.

That's got to bring out some big fund buyers for this premier e-commerce play soon.

And to put their love for this juggernaut in perspective, recall the company's Q3 earnings announcement on October 28. After reporting a 37% EPS miss, the stock proceeded to march to all-time highs above $1750.

SHOP is still a topline growth story as they expand and create more alliances across e-comm.

The forced selling should be over soon and I hope to be a proud owner of some shares with a $700 handle on them.

One more note on the pessimism: This week, KeyBanc analyst Josh Beck lowered the firm's price target on Shopify to $1,250 from $1,750 to better reflect market conditions. This followed word last week that SHOP was retrenching on its strategy to have lots of warehouse space across the country to compete with Amazon (AMZN - Free Report) .

Business Insider reported last Friday that Shopify was reducing contracts with U.S. warehouses, marking a shift in its effort to challenge Amazon's massive fulfillment machine.

Again, I think the worst is nearly discounted and SHOP will be a great stock to scoop under $800.

Disclosure: No positions in SHOP or AMZN at this time.

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