Shopify Stock News and Forecast: Bulls fail to SHOP after 10-for-1 stock split

Update: Shopify Inc. (NYSE: SHOP) extended its losing streak into the third straight day on Wednesday, resuming its correction from over one-week highs of $39.50. The stock price of SHOP slid 5.64% to end the day at $33.05, having hit a new five-day low of $32.47 earlier in the session. The share price of the Canadian e-commerce giant slipped after the completion of a 10-for-1 split of its common stock on Wednesday. The share split “will make ownership more accessible to all investors,” the company said in a statement before the stock split. SHOP has eroded roughly 75% of its value so far this year as e-commerce traffic slows and investors flee growth stocks, in the face of rising borrowing costs.

Shopify (SHOP) stock will complete its share split on Wednesday, June 29. SHOP shares that closed at $350.26 on Tuesday, should open at 1/10 the price near $35. The SHOP stock price sank a surprising 6.1% on Tuesday ahead of the split as growth stocks mostly tanked in tandem with the Nasdaq.

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Shopify Stock News: SHOP could get energized from split

Shopify stock famously went on a tear through the heart of the pandemic. Trading as low as $332 in March 2020, SHOP stock then flew ever higher to $1,762 last fall. Then it sank all the way to $297 just two weeks ago before trading higher with the bear market rally. Shopify management is of course hoping that a share split will make it more suitable for retail investors who prefer lower per-share prices.

Amazon (AMZN) briefly saw a rally in its share price following their 20-for-1 split on June 6. Tesla is supposedly gearing up to seek a shareholder vote for a 3-for-1 stock split, while Google-parent Alphabet has scheduled a 20-for-1 stock split next month. It seems the age of over $1,000 mega-cap share prices is becoming a thing of the past.

Also read: Amazon Stock Deep Dive: AMZN price target at $106 with near-term risks offset by long-term growth

Just this past week Morgan Stanley analyst Keith Weiss reinitiated coverage of Shopify stock. He said that “risks around the macro sensitivity of small business, a normalization of e-commerce spending and limited transparency from management present near-term” uncertainty and that Shopify's new investment in an Amazon-stye fulfillment service should cut into margins for the time being. Still, Weiss gave SHOP a $450 price target and an equal-weight rating.

Last week, Shopify joined up with Twitter to allow Shopify merchants to sell directly to their Twitter followers. "Choose how you want to display your product: a smaller Shop Spotlight carousel under your bio or a more extensive Twitter Shop," Shopify said in a statement about the new strategy. The Shop Spotlight allows users to sell up to five products directly under their bio, and the Twitter Shop allows the showcasing of as many as 50 products.

Shopify Stock Forecast: Support area getting stronger

The demand zone between $298 and $308 ($29.80 to $30.80) for SHOP stock should continue to hold since it has done so on six occasions now. Every test of a support zone that does not fail makes it that much stronger.

The major problem is that SHOP has been stuck below $400 ($40) for nearly two months now. Breaking $40 from here on will signify that a rally is afoot. Breaking below $30 means there is more pain ahead. 

SHOP daily chart

Previous updates

Update: SHOP was pressured into a support area on the 4-hour and 15 min charts near the lows of the day at $41.88. The price could be due for a bullish correction with the higher areas appealing in terms of price imbalance mitigation. The sell-off from $49 leaves an inefficiency in price between $47.02 and $47.70 on the hourly chart. The resistance on the hourly chart comes in just below $50.00. On the downside, the bears can eye $39.00 hourly lows.

Update: Shopify's 10-for-1 stock split failed to entice retail traders on Wednesday. Shares that closed at a split-adjusted price of $35.02 on Tuesday, opened at $34.40 and are now down 4% to $33.63 an hour into Wednesday's session. The Nasdaq is flat after starting the session down about half a percentage point. Megacap tech like Amazon (AMZN) and Apple (APPL) are ahead with both advancing near 2%.

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