In recent months, several investor-favorite stocks have been climbing aboard the good ship stock split, but the news of these splits has taken a back seat to the historic volatility and plummeting stock market. The S&P 500 and the Nasdaq Composite have both plunged into correction territory. The tech-heavy Nasdaq has fallen deep enough to be well into bear market territory, down roughly 29% from its November high, while the S&P is flirting with the bear as well closing the week down 18.7%.

The faltering market is taking many quality stocks down with it, creating some compelling opportunities. Just last month, Shopify (SHOP 1.73%) announced plans for a 10-for-1 stock split, after years of stellar growth had made the shares inaccessible to many retail investors. However, the bear market has punished the e-commerce platform provider, driving its stock down a mind-boggling 76%, even as its growth streak remains unbroken. This creates a compelling opportunity for long-term investors.

Well dressed person in an office looking at a smartphone.

Image source: Getty Images.

Tough comps obscuring impressive growth

Investors are no doubt aware that Shopify was one of a number of companies that experienced breakneck gains during the pandemic, as many consumers made online purchases a way of life. In the wake of such heady growth, Shopify's recent results look downright dismal -- but don't be fooled.

In the first quarter, Shopify reported revenue that grew 22% year over year -- which at first glance seems like nothing to write home about. However, that was on top of 110% growth in the prior-year quarter. Taken in the context of its growth spurt in 2021, this represents a compound annual growth rate (CAGR) of 60%. There was a similar story with its gross merchandise volume (GMV) or the value of products sold on its platform. While GMV was up just 16% in Q1, that was on top of GMV that grew 114% during the same time last year. That's a CAGR of 57%.

Moreover, investors saw a hit to Shopify's bottom line -- which swung from a profit to a loss -- and headed for the exits. Shareholders were concerned that the company's move into fulfillment had eaten into its bottom line. However, a quick review of the details suggests that those fears were unfounded.

As my colleague Nicholas Rossolillo pointed out, the loss was the result of equity investments in buy now, pay later fintech company Affirm and cross-border specialist Global-E Online, among others. The tech-centric bear market has punished these stocks, sending their share prices down 85% and 74%, respectively. The declining prices are reported on Shopify's income statement, temporarily reducing profits. When the shares recover, however, that will work to Shopify's advantage. Had it not been for those "paper" losses, Shopify would have turned a profit.

Additionally, hidden among the barrage of financial metrics were hints that Shopify's omnichannel focus is bearing fruit. Point-of-sale GMV was up 80% year over year, while the penetration of gross payment volume on the platform increased to 51%, up from 46%. These points suggest that opportunities for growth still abound -- if you know where to look.

Shopify's strategy for logistics is also coming into focus. The combination of the Shopify Fulfillment Network with its pending acquisition of Deliverr will result in an end-to-end logistics platform, reducing the complexity of the supply chain and providing port-to-porch solutions for Shopify's merchants.

Has e-commerce growth stalled?

The common narrative of late is that online retail is treading water, but that view lacks context. The U.S. Department of Commerce just released data regarding retail sales data for the first quarter, and the results provide insight into consumer spending patterns. While total retail sales increased by roughly 11%, e-commerce sales grew by 7%. This suggests that after being cooped up during the pandemic, many consumers are venturing out to brick-and-mortar stores to shop. At the same time, e-commerce transactions continued to grow, albeit at a slower pace. 

Some investors fear that e-commerce growth has hit a wall, but the data suggests that the growth trajectory is merely returning to historical averages. Given Shopify's pole position as the leading provider of e-commerce services to merchants, the company is well-positioned to benefit from the next phase of online sales growth.

More growth where that came from

Even after record adoption that occurred over the past couple of years, global e-commerce sales are expected to climb to $5.5 trillion in 2022, surging to $7.4 trillion by 2025 -- a gain of 50% over the coming four years. So, contrary to recent reports, the death of e-commerce has been wildly exaggerated and growth will continue for years -- if not decades -- to come. Shopify's growth has always outpaced that of the broader e-commerce market and there's simply no evidence to suggest that won't continue.

Investors looking for a bargain need look no further than Shopify. The tech-centric bear market and fears regarding the slowing growth of e-commerce have sent Shopify stock reeling, down 76% off its recent highs. Not only that, but Shopify stock is trading at just six times forward sales, a valuation not seen since early 2016. 

Given its industry-leading position, favorable secular tailwinds, and massive addressable market, Shopify is a bargain at this price -- and a stock-split stock to buy now and hold forever.