Shopify Inc. (TSX: SHOP) is a special Canadian success story and looking at its stock performance over the past year or more, it is easy to see why.
(Shopify stock performance chart. Click to enlarge.)
The recent bull run even saw its shares clocking in at #2 on the inaugural TSX30 Index, which tracks the best performing Canadian companies over the past three years.
While the summer of 2019 was a tough one for the tech industry, given the ongoing trade dispute between the US and China putting many emerging and established operators in the sector firmly in their crossfire, the web-based business solutions platform actually hit a new peak in August 2019. In early September it even helped lift the TSX to an all-time high and over the course of that week, helped lift Canada’s main stock index higher and higher.
However since then, its shares have continued to trend lower and lower, losing nearly 30% of its value in mere weeks. What happened? Around the same time as its positive news on boosting the TSX, SHOP also closed a $603 million secondary offering, which could have prompted traders to sell, but that could also be mere conjecture.
One link that has emerged, is that a 30% price correction is actually quite common among stocks. Goldman Sachs analysts say that bear markets average a loss of 30.4% and last 13 months; it takes stocks nearly 22 months, on average, to recover.
In fact, one year ago the Ned Davis Research firm predicted this very thing would happen among North American markets around now.
Does this mean that SHOP stocks are actually becoming a possible bargain? If history has shown anything, it could lower even further before the company announces its quarterly earnings next month.
With a visionary leader who built the company from scratch still at the helm, Shopify continues to run at a relatively break-even profitability, much like Amazon (NYSE:AMZN) , it continues to be well run and focused on growth. Its contracts to run various cannabis stores in several provinces, coupled with its other growth initiatives in the news, make for a platform that is likely still worth your investment diligence.