Shopify (NYSE:SHOP) was starting to look like its best days were behind it. And with good reason, it was a pandemic darling when all those brick-and-mortar shops suddenly had to migrate online or risk having no business at all. But after gaining over 8% at the time of writing and over 25% this week, plenty of investors are taking another look at this former star.
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Shopify’s earnings report gave it a leg up, and things only got better when Shopify moved to sell its Shopify Logistics business to Flexport in exchange for 13% of the business in stock. That wasn’t the end of the story for Shopify, though; it also announced that it was laying off 20% of its workforce, roughly 2,000 people. It’s been nearly a year since Shopify announced any layoffs, but following up with one twice the size of the last sure seems to have drawn interest.
Meanwhile, there are signs that it’s improving with analysts as well. Shopify turned two analysts around—UBS and Bank of America—from Sell to “neutral,” and it’s thanks to that combination of cost-cutting and job losses that will all but certainly reduce expenses. Moreover, Shopify seems to be improving its position with Amazon (NASDAQ:AMZN), which will likely help its position still further.
Overall, Shopify stock is rated as a Moderate Buy based on 12 Buy ratings and 20 Holds. However, it also comes with 11.56% downside risk thanks to its average price target of $54.85.
