Shopify Stock Forecast: SHOP Shares Zoom Up More Than 6% On Black Friday Strength

Shopify (SHOP) advanced 6.4% in Monday’s premarket after news of strong sales from Black Friday impressed the market. Global sales topped $3.36 billion on the United States' top retail shopping day of the year, but interestingly a large subsection of the sales came from abroad. 

While SHOP stock is ahead 6.4% at $39.15 about 30 minutes before the open, the rest of the market is more somber. Anti-covid regulation protests have engulfed China, and markets are selling off over worries that their longevity may produce a material hit to US companies that have production contracts in China. Nasdaq futures are off 0.9% on Monday.

Already Bloomberg is reporting that Apple (AAPL) is likely to miss its iPhone production goals for November by 6 million units. Tesla (TSLAstock has also lost more than 2% in the premarket based on worries over meeting its production targets as well despite the fact that it will begin deliveries of electric semi-trailer trucks in the coming week. 

Shopify stock news: Black Friday revenue jumps 17% from last year

As 2022 has witnessed the United States go in and out of recession and big box retailers like Target (TGT) deal with customers' inflation fatigue, many observers thought Black Friday might be a letdown this year. However, Shopify’s thousands of mom-and-pop e-commerce retailers did not get the memo. Instead, Shopify saw Black Friday sales jump 17% from last year and even 19% on a constant currency basis. 

"Black Friday Cyber Monday has grown into a full-on shopping season,” said Harley Finkelstein, Shopify’s president. “The weekend that started it all is still one of the biggest commerce events of the year, and our merchants have broken Black Friday sales records again. Our merchants have built beloved brands with loyal communities that support them. This weekend, we’re celebrating the incredible power of entrepreneurship on a global stage.”  

Shopify said its e-commerce partners sold $3.5 million per minute worth of merchandise around noon on Friday. Many Americans take the day off after Thanksgiving on Thursday. Besides the United States, Shopify said a large percentage of sales came from Canada and the United Kingdom.

In a statement, Shopify said the average checkout cart amounted to $102.31, and that apparel & accessories, health & beauty, and home & garden were the top product categories for customers.

In its list of top trading ideas for 2023, Bank of America said on Monday that shorting US tech made the list. The "old leadership, still over-owned, era of QE is no longer, era of globalization no longer, plus peak penetration and regulation risks,” the analysts wrote.

Shopify stock forecast

Before this sudden bout of good news, SHOP stock had been in a clear sell-off. Shopify stock rose from October 13 to November 15 before its recent downturn.

Shopify stock has made it back to the shoulders of the opening price for the sessions on either side of the shooting star candlestick on November 15. That type of candlestick that falls off its high, early session price to close lower than its open (in the shape of an upside-down hammer) is a major bearish sign, and that is exactly what occurred over the following two weeks. 

The Moving Average Convergence Divergence (MACD) also duly turned over, and the 9-day moving average in the past week had begun dropping back closer to its 21-day counterpart.

Now SHOP bulls can only focus on $41.73 – the high from the November 15 shooting star. Based on SHOP price action in both mid-November and August, shares will likely face resistance between $40 and that higher price level. Beyond there Shopify stock briefly made its way to $45.43 on August 11 but was immediately pushed down harshly from a wave of profit-taking.

Support might be found between the 21-day moving average and the ascending bottom trend line that started in mid-October. This is an area roughly between $35.50 and $37.50.

(Click on image to enlarge)

SHOP 1-day chart

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Disclosure: The author owns shares of SHOP.

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