Cathie Wood often invests in speculative companies with profits that are years away, though Tesla has been profitable for years. So has Shopify, a top-10 Ark Invest holding. Thanks to a strategic shift, Shopify earnings growth is expected to skyrocket in 2023, with strong gains continuing next year. And SHOP stock is flashing a buy signal.
Shopify Logistics Sale
Shopify announced the sale of its fulfillment business to privately held Flexport on May 4, with the deal closing in June. The e-commerce software giant in recent years had sought to challenge Amazon.com in third-party fulfillment for online orders. But it turned out to be an "expensive experiment."
Shopify now holds a 13% stake in Flexport, but exiting logistics will mean the company can slash costs. Meanwhile, gross merchandise growth is picking up after slowing sharply following the coronavirus pandemic boom.
Shopify Earnings
Shopify earnings plunged to 4 cents a share in 2022 from 64 cents in 2021. The end of the pandemic meant a big slowdown in e-commerce growth.
First-quarter earnings, reported May 4 along with the Flexport deal, tumbled 50% vs. a year earlier. Sales grew 25% to $1.51 billion.
But in the wake of the Flexport deal, analysts said they expect full-year Shopify earnings per share to surge 772% to 35 cents, with another 63% jump in 2024 to 57 cents.
Stock Market Forecast For The Next Six Months
SHOP Stock
Shopify stock gapped up 24% on May 4 following first-quarter earnings and the Flexport deal, blasting out of a cup-with-handle base. After peaking at a 52-week high of 65.54 on May 10, shares began to consolidate. SHOP stock briefly broke out to a fresh 52-week high in mid-June, but pulled back with the broader market.
This Cathie Wood stock has once again found support at the 21-day line. A bounce from near the 21-day line on June 28, broke a short downtrend, offering an entry into SHOP stock. However, shares did back off an intraday high above a prior buy point of 65.54. Shopify stock dipped June 29, before bouncing back on June 30.
Ark Invest Stake
Ark Invest owns 0.68% of Shopify stock as of June 30. It's the 8th-largest holding across Cathie Wood's Ark ETFs, with a 3.7% weight overall.
While SHOP stock has been a big winner for Ark Invest in 2023, its current position is still underwater. The ARKK, ARKW and ARKF funds have an average cost of $121.32-$128.27.
That's not uncommon. Ark Invest has a big profit in its current Tesla stock holdings. But the other top-10 Cathie Wood stock positions are losers right now, with some more than 75% below Ark's cost basis.
