Shopify set for strong growth thanks to Black Friday forecasts

Analysts from Scotia Capital are optimistic that Shopify's stock price could gain further momentum, supported by promising forecasts for the upcoming Black Friday weekend. Despite a significant price surge following the impressive third-quarter results in early November, the analysts see potential for further growth. Typically, shares of the Canadian e-commerce software provider experience growth in the weeks leading up to Black Friday. However, this year presents unique conditions as the strong quarterly figures were released unusually close to Black Friday, and the stock has already seen a significant increase. Despite currently being highly valued compared to competitors, analyst Kevin Krishnaratne believes the stock could continue to rise by the end of the year. Historically, Shopify's stock price increases by an average of 7.5 percent in the 15 trading days before Black Friday; however, this year the stock had already risen by over 31 percent by Wednesday. Scotia Capital anticipates strong trends during the Black Friday Cyber Monday sales days, which traditionally account for a substantial portion of Shopify’s fourth-quarter results. The forecasts indicate Black Friday sales of at least 4.9 billion US dollars, representing an increase of 18.7 percent year-over-year. The entire shopping weekend could bring sales of 11.3 billion US dollars, up 21.7 percent. Shopify is likely to exceed market estimates in the fourth quarter, particularly in the area of same-store sales growth. According to Krishnaratne, growth in the fourth quarter could also gain momentum in other areas that are harder to predict, including the corporate and international sectors.