Shopify Inc. (SHOP) shares extended their rally during Wednesday's premarket session after Wedbush Securities upgraded the stock to Outperform with a price target of $1,300 per share, although the stock moved lower later in the session.

Key Takeaways

  • Shopify shares extended their rally after Wedbush Securities upgraded the stock to Outperform with a $1,300 price target.
  • Analyst Ygal Arounian believes that the near-term ability to capture market share in e-commerce could drive improvements in financial results.
  • The stock remains in a bullish uptrend judging by the moving average convergence divergence (MACD), with room to run higher when looking at the relative strength index (RSI).

Wedbush Securities analyst Ygal Arounian is confident in Shopify's near-term ability to capture market share in e-commerce and continues to see the pull-forward in e-commerce trends as sustainable over time, driven by changing consumer habits. In addition, the analyst believes that Shopify is in the early stages of significant merchant, gross merchandise volume, and revenue growth stemming from a well-built retail operating system.

The move comes about a week after Goldman Sachs raised its price target on Shopify to $1,318 per share, saying that the steady growth in value-added services could expand the company's opportunity per merchant. Other analysts have remained on the sidelines due to Shopify's lofty valuation.

Chart showing the share price performance of Shopify Inc. (SHOP)
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From a technical standpoint, the stock broke out from the 50-day moving average at $995.44 during Tuesday's session before extending the rally during Thursday's session. The RSI remains neutral with a reading of 57.54, but the MACD experienced a bullish crossover. These indicators suggest that the stock has more room to run over the coming sessions.

Moving average convergence divergence (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security's price.

Traders should watch for consolidation above the 50-day moving average at $995.44 over the coming sessions before moving to retest prior highs of around $1,150.00 or upper trendline resistance at around $1,200.00. If the stock breaks down from the 50-day moving average, traders could see a move toward reaction lows of $850.00 or trendline support at around $820.00, although that scenario appears less likely to occur.

The Bottom Line

Shopify shares extended their rally during Wednesday's pre-market session after Wedbush Securities upgraded the stock to Outperform with a $1,300 price target. The analyst believes that Shopify's near-term ability to capture market share in e-commerce could drive higher results. Meanwhile, the stock still has technical room to run.

The author holds no position in the stock(s) mentioned except through passively managed index funds.