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Why Shopify Stock Jumped on Wednesday

By Daniel Sparks – Updated Apr 8, 2020 at 5:39PM

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One analyst thinks shares of the e-commerce platform provider have more than 20% upside over the next 12 months.

What happened

Shares of e-commerce specialist Shopify (SHOP 0.64%) soared on Wednesday, finishing the trading day up 9.5%.

The stock's gain was probably fueled by a combination of a bullish day for the overall stock market and an analyst's reiterated overweight rating for the stock.

Shopify e-commerce platform on a smartphone, laptop, and tablet

Image source: Shopify.

So what

Market indices rose sharply on Monday, driving many tech stocks higher -- especially growth tech stocks like Shopify.

Also helping fuel Shopify stock's gain may have been commentary from Wells Fargo analyst Timothy Willi. Despite expectations for a deteriorating economic outlook, Willi maintained an overweight rating for Shopify shares. While the analyst did lower his 12-month price target for the stock from $600 to $500 to reflect macroeconomic headwinds, investors have arguably already priced in a more challenging operating environment during the coronavirus pandemic. 

The analyst's price target implies 21% upside from Shopify's current stock price of $414.51.

Now what

Last week, Shopify shares fell sharply when the company suspended its full-year financial outlook. Management said there's uncertainty about how the year will play out but also noted that it expects to meet or exceed its first-quarter guidance range for both revenue and operating income. 

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.

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Shopify Inc. Stock Quote
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$26.94 (0.64%) $0.17
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