- Shopify has successfully completed its stock split.
- Shares are tumbling today as markets adjust.
- However, investors can expect them to start rising again when markets shift.
Shopify (NYSE:SHOP) has begun trading on an adjusted basis after successfully splitting its stock. This marks one of the first in a summer marked by important stock splits. This important day in the company’s history isn’t off to a great start. Since markets opened, SHOP stock has been falling. As of this writing, shares are down 6.5%.
Investors shouldn’t be discouraged.
It often takes time for a company to find its footing in the market after undergoing a stock split. It is a difficult time for growth stocks in general, and particularly for the tech sector. Let’s take a look at Shopify and why it may take time for SHOP stock to start rising again.
SHOP Stock Has Split: Now What?
SHOP stock isn’t the only name battling broad market forces right now. Both Tesla (NASDAQ:TSLA) and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), two tech stocks preparing to split, are in the red today, down 4% and 0.5%, respectively. The season has been marked by rising inflation, market selloffs and interest rate hikes, all of which have pushed mega-cap tech stocks down. Recent consumer price index (CPI) data hasn’t helped either. The Nasdaq Composite is down almost 8% for the month.
The reality is that the Shopify stock split simply happened at an inconvenient time. When the company first announced its plans months ago, the industry landscape didn’t look so bleak. Now confidence in high-growth tech plays is low. Last week, the Barron’s Investing in Tech Conference made it clear that investors are still quite bearish on the tech sector.
However, the recent split puts SHOP stock at a low enough price that it may be attractive to previously skeptical investors. The downturn won’t last forever, and experts have flagged Shopify as a stock to buy for gains after markets rebound. InvestorPlace contributor Chris Lau recently placed it on a list of cheap growth stocks with strong potential. “In May 2022, Shopify bought Deliverr for $2.1 billion in cash and stock,” he reported. “The acquisition will give Shopify’s independent business customers an edge. They will have a powerful logistics platform that increases the customers’ satisfaction.”
Fellow contributor Bret Kenwell noted that while SHOP stock isn’t perfect, Shopify has a “potentially landscape-altering e-commerce platform with plenty of potential for growth and profitability.”
The Bottom Line
Investors shouldn’t be quick to dismiss SHOP stock. While it’s true that Shopify has struggled this year, there is reason to believe it can easily rise again.
Originally published on InvestorPlace.com
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.