Wells Fargo cautious on Shopify as user engagement wanes
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Second quarter engagement trends should arouse some trepidation on Shopify (NYSE:SHOP
+3.2%), per Wells Fargo.
A team of equity analysts led by Jeff Cantwell published research on Wednesday that revealed a 13% decline in visits and a 5% drop in unique visitors to Shopifyâs (SHOP) login page for the month of May. 
âWe believe this is indicative of the ongoing near-term challenges/slowing growth in e-commerce as the global economy laps its hyper-growth phase in e-commerce during the pandemic,â Cantwell explained, indicating a âdownward biasâ to both gross merchandise value and revenue estimates for the second quarter. 
Cantwell added that policy changes in terms of app tracking transparency (ATT) at Apple (AAPL) are also likely affecting the business, citing CEO Tobi Lutkeâs tweets on the issue as indicative of its prominent impact.
âWe believe it's worth considering Apple more deeply given the company's evolving privacy laws, which we think are likely affecting Shopify's merchant base,â Cantwell wrote. âThough we don't know the exact impact, we believe the right way for investors to be thinking about this is Apple's implementation of ATT will be an ongoing headwind to GMV/revenue growth for SHOP, at the very least in the near term.â
To be sure, Cantwell noted that activity continues to look strong versus pre-pandemic levels and suggests sustainable growth in the user and merchant bases when zooming out from the difficult year-over-year comps. As such, he retained a âBuyâ rating on shares and a lofty $555 price target on shares despite the expectation of some choppiness in the current quarter.
Read more on the companyâs âfounder shareâ plan.