Shopify stock slips as UBS starts coverage at Sell
Sean Gallup

Shopify (NYSE:SHOP) stock slipped in premarket trading as UBS took a bearish view of the Canadian e-commerce company.
The Swiss bankâs analysts indicated that competitive pressure from Amazon (AMZN) via its Buy with Prime initiative poses a significant risk to Shopify. At the very least, the incursion by the tech giant into Shopifyâs core domain will elevate capital expenditure in coming years, hampering free cash flow dynamics.
âAmazon runs logistics at a loss, has deeper pockets given its cash and higher take rate, and has historically viewed other businessesâ profits as its opportunity which could impact SHOPâs margins, which do not look incorporated into Street estimatesâ the team at UBS explained.
The team advised clients that consensus earnings estimates for the company are simply too high heading into an expected recession in 2023, elevating downside risks.
"On the bottom line, neither the incremental capex post-2024 nor the margin impact incorporated in Street estimates accounts for Shopify's need to continue investing in their logistics capacity, in our view," the team concluded. "We are currently bearish on the stock and we initiate on SHOP with a Sell rating."


The team assigned a $30 price target to the stock.


Read more on Wolfe Researchâs move to a more cautious rating on Wednesday.