As This E-Commerce Stock Gains Market Share, JMP Expects It To Surge 45%

According to JMP Research, Shopify shares have a powerful upside potential on the way to becoming the go-to platform for larger enterprises. 

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It was reported that at the close of Tuesday, Shopify shares had been upgraded from market performance by Andrew Boone to market outperform. His price target of $65 implies a 45.1% upside over Tuesday's close. 

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It was Boone's recommendation to reaffirm our view that Shopify is the market leader in commerce enablement based on the analysis of OpEx structures across the website builders, the analysis of third-party website traffic data, and conversations with professional web developers across all these platforms. Boone wrote to clients on Wednesday that they continue to see Shopify taking share. 

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Shopify's shares gained 2.5% before the bell on Wednesday; they have rallied 29% in 2023, but the stock has gone down by 24.2% over the past 12 months, which was one of the biggest losses in the stock market. 

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The analyst did say, however, that Shopify, in addition to other website builders, is capable of engaging in more expense discipline, which is certainly something Shopify can do. In 2022 and 2023, although Shopify's advertising expenses surpassed the combined advertising expenditures of Wix and Squarespace combined as the largest revenue-generating platform in 2021, the firm stated. 

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Shopify expects to generate 19% of its revenue in 2023, an increase of over 19% in 2019. It is important to note that while Shopify has expanded its service offering, the company is also spending $495M more on R&D in 2022. "We acknowledge that there is now a broader range of services that Shopify offers, but we are concerned about the $456M increase in R&D expenditure owing to employee expenses and the addition of Deliverr," said Boone. 

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Boone explained: "Based on this information, we believe that there is the possibility that Shopify could benefit from significant cost synergies, thereby achieving a significant increase in profitability.".

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