Shopify (SHOP 3.42%) shareholders beat the market this week as the stock jumped 14% through Thursday trading. That boost compared to a strong 2.3% rally in the S&P 500, according to data provided by S&P Global Market Intelligence. Yet shares remain in deeply negative territory over the broader 2022 year.
Shopify's spike this week came as investors grew less pessimistic about the economy as third-quarter earnings results started rolling in. It was also powered by a general rebound among those hard-hit tech stocks.
So what
The Nasdaq Composite was up nearly 3% through Thursday trading, and that spike was the biggest factor pushing Shopify's stock higher. The e-commerce platform stock has been trending down so far in 2022, along with many formerly high-flying tech stocks, thanks to a growth hangover from the pandemic. That factor means that shares are likely to rebound when investor sentiment turns more positive as it did this week.
Shopify's business is sensitive to economic growth rates, after all. If consumer and business spending remain strong, then its sales rebound strategy will be easier to achieve. Comments from Bank of America this week suggest that this economic stabilization could be happening today.
Now what
The real test is yet to come. Shopify will announce its third-quarter results on Thursday, Oct. 27. That report will show whether sales growth trends stabilized, or continued decelerating. Investors will also learn whether management made progress recalibrating its spending to better match slower transaction growth on Shopify's e-commerce platform.
Yet even if those sales and profit trends improve, investors might remain worried about the upcoming holiday shopping season. Supply chain pressures and inflation are creating an unusually cloudy growth outlook. This lack of clarity might be reflected in a wide fourth-quarter forecast from Shopify next week.
