Shopify Inc. (SHOP) shares rose more than 5% during Monday's session after the company joined forces with Walmart Inc. (WMT) to open the Walmart Marketplace. The new integration will enable Shopify sellers to list their items on Walmart.com with the goal of onboarding 1,200 sellers this year.
Piper Sandler upgraded Shopify stock from Neutral to Overweight with an $843 price target following the partnership announcement. Analyst Brent Bracelin's analysis of weekly downloads suggest that improving merchant and consumer trends in April have further accelerated into May and June.
In addition, Bracelin suggests that digital commerce penetration rates at 15% could double or triple by 2030 in a post COVID-19 world. The pandemic could permanently alter consumer purchasing behavior, and Shopify is one of the best positioned digital commerce beneficiaries.
Shopify has also been expanding into new markets. In May, the company announced plans to offer business accounts for independent businesses and entrepreneurs. Shopify Balance will give merchants access to critical financial products required to start, run, and grow their businesses.
From a technical standpoint, Shopify stock broke out from short-term trendline resistance toward its prior highs of around $850 per share. The relative strength index (RSI) rose to 61.21 but remains below overbought levels, while the moving average convergence divergence (MACD) could see a near-term bullish crossover. These indicators suggest that the stock has more room to run with its current rally.
Traders should watch for a move toward prior highs of $850 over the coming sessions. If the stock breaks out, traders could see a move toward fresh highs. If the stock breaks down from lower trendline support, traders could see a move to retest the 50-day moving average at around $663.90 over the coming sessions, although that appears less likely to occur given the bullish tailwinds in recent weeks.
The author holds no position in the stock(s) mentioned except through passively managed index funds.