Already soaring, Shopify stock could see more Black Friday upside: Scotia Capital
“Still, we think the stock can continue to move higher to close out the year,” Krishnaratne wrote.
Shopify (SHOP.TO)(SHOP) stock is expected to continue rising based on strong Black Friday projections, according to analysts at Scotia Capital, despite a significant price surge following the company’s third-quarter earnings report earlier this month.
Kevin Krishnaratne, an analyst at Scotia, noted that Shopify shares typically see an uptick in the three weeks leading up to Black Friday. However, this year’s scenario is somewhat unique because Shopify’s third-quarter 2024 earnings report, released just days before Black Friday, caused the stock to soar far beyond its typical seasonal increase.
“Still, we believe the stock has room to climb as the year ends,” Krishnaratne stated, despite the company's valuation currently being notably higher than its peers, due to “positive developments around this weekend.”
From 2016 to 2023, Shopify saw an average increase of 7.5% in the 15 trading days leading up to Black Friday. However, this year’s strong third-quarter results, reported on November 12, led to an immediate 21% jump in the stock price. As of Wednesday’s close, Shopify shares were valued at US$112.54, up more than 31% over the 15-day window. Scotia’s target price remains US$115, with U.S. stock markets closed for the Thanksgiving holiday on Thursday.
Scotia Capital predicts “strong Black Friday Cyber Monday (BFCM) trends” for Shopify, noting that the holiday shopping period typically accounts for about 12% of the company’s fourth-quarter gross merchandise value (GMV). Based on historical trends and estimates, Scotia forecasts Black Friday sales of at least US$4.9 billion (an 18.7% year-over-year increase) and total sales for the entire shopping period of US$11.3 billion (a 21.7% increase).
Shopify has consistently outperformed the broader retail sector, and industry forecasts suggest that the company will again see higher same-store sales growth in the fourth quarter. Krishnaratne added, “We expect to see more consistent GMV growth trends in Q3 and Q4, but there could be an acceleration similar to recent years, particularly in enterprise and international sectors.”
