Shopify Drops By 80% Could This Be Warning for the Rest of the Market

The stock market continues to see some of the most bearish trends imaginable, as prices for most assets has continued to drop significantly. Out of the many examples that people can pick up in the last month, the NASDAQ stands as possibly one of the worst performing.

As one of the biggest stock options in the market, people could gauge how poorly things were going with it losing nearly 33% in its price. However, no tech stock has done quite as poorly as Spotify, which saw its prices drop by 80%.

As Shopify continues to reel from its poor performance in the market, it is becoming a cautionary tale for most investors. The incredibly high valuation matched with its continuously dropping price means that there are much better stocks to get right now.

The ecommerce industry has been seeing a major dip following the pandemic, and has yet to properly recover from it. Shopify still remains one of the largest ecommerce platforms in the market right now, since it can help various small businesses design their custom website.

Seriously Overvalued

One of the most important things that happened to Shopify was the pandemic, since it lead to a major boom throughout the ecommerce industry. Various companies were taking their stores online, and one of the best ways to take it online was to make one with Shopify.

However, following the pandemic, things started to get back to normal, and many investors believed that Shopify was seriously overvalued. Growth following the boom was just 16% compared to the incredible rise of over 50% last year.

Since most of the execs thought that the boom would never end, they have managed to overextend their hand and are hoping for returns that could never possibly materialize.

Even Higher Operating Expenses

Under the misconception that the boom would never end, Shopify grew its team by a significant margin, various costs grew as well. Administration, marketing, and various other departmental costs continued to rise, which brought the company a loss of $190 million.

Making things worse for Shopify is the fact that they are still facing incredible competition from the rest of the market. Sites like Squarespace and Wix continued to grow, and Amazon threw its hat in the ring with a service called Fulfillment.

Possibly Losing to Amazon

Although Shopify remains one of the most influential company ecommerce store in the market, it is becoming obvious that this success will not last them long. In fact, with Amazon now entering the ring, it is also becoming possible that Shopify will not be able to recover from the losses that it has suffered. Therefore, its stock price remains a bear market trap for all investors.