Shopify Plunges 3.17% Intraday, Does This Mark the Start of a Valuation Correction?

Summary
• Loop Capital downgrades SHOP to Hold amid valuation concerns
• Intraday price drops to $122.54, its lowest since March 2024
• 52-week range remains intact at $48.56–$129.38
• Analysts highlight 14.7x 2025 revenue multiple as overvalued

Shopify’s sharp selloff reflects growing investor caution as Loop Capital’s downgrade highlights valuation pressures. The stock’s 3.28% decline today has traders eyeing key support levels and options activity for clues about near-term direction.

Loop Capital Downgrade Sparks Intraday Sell-Off
Loop Capital’s downgrade from Buy to Hold, coupled with its unchanged $120 price target, triggered immediate selling pressure. The analyst cited a 14.7x 2025 revenue multiple as overvalued relative to fundamentals, despite Shopify’s strong Q1 GMV growth and AI-driven tool expansion. The move signals a shift in sentiment as investors await clearer catalysts for growth amid macroeconomic uncertainties and cross-border trade risks.

Options Playbook: SHOP20250801C127 and SHOP20250801C128 for Volatility Play
• K-line pattern: Short-term bullish trend + 看涨吞没 (Bullish engulfing)
• MACD: 4.39 (Signal: 3.19), Histogram: 1.20 (Bullish momentum)
• RSI: 68.03 (Approaching overbought)
• Bollinger Bands: Upper $126.80 (Resistance), Middle $116.45 (Trendline), Lower $106.11 (Key support)
• 30D MA: 113.82 (Below current price)

The 30D MA at $113.82 and RSI near overbought suggest short-term mean reversion is likely. However, Loop Capital’s downgrade and valuation pressures imply consolidation could persist. Monitor Amazon’s -1.06% move for sector sentiment cues. Watch for $114.11 breakdown or a reversal above $127.00 to define the next phase.
Top Options:
• SHOP20250801C127
- Strike: $127, Expiry: 2025-08-01, IV: 44.10%, Delta: 0.4208, Theta: -0.366978, Gamma: 0.041013, Turnover: $15,767
- LVR: 44.48% (High leverage for directional bets), IV in mid-range, strong gamma for price sensitivity
- Payoff (5% downside): $124.22 → $118.01 → max(0, $118.01 - $127) = $0.00 (Put scenario: $127 - $118.01 = $8.99).

• SHOP20250801C128
- Strike: $128, Expiry: 2025-08-01, IV: 44.11%, Delta: 0.3812, Theta: -0.344593, Gamma: 0.039960, Turnover: $8,851
- LVR: 51.25% (Aggressive leverage), IV in mid-range, moderate gamma for volatility capture
- Payoff (5% downside): $124.22 → $118.01 → max(0, $118.01 - $128) = $0.00 (Put scenario: $128 - $118.01 = $9.99).

Aggressive bulls may consider SHOP20250801C127 into a bounce above $127.00, while volatility traders could pair SHOP20250801C128 with a short-term reversal play if support at $114.11 holds.

Backtest Shopify Stock Performance
The backtest of Shopify (SHOP) after an intraday plunge of at least -3% shows favorable performance over various time frames. The 3-Day win rate is 60.61%, the 10-Day win rate is 87.88%, and the 30-Day win rate is 100.00%, indicating a higher probability of positive returns in the short to medium term. The maximum return during the backtest period was 23.57%, which occurred on day 59, suggesting that SHOP tends to recover strongly after such events.

Positioning for a Volatility-Driven Rebound: Key Levels to Monitor
The selloff tests critical support at $114.11, with a breakdown triggering deeper corrections toward $106.11. The 30D MA at $113.82 and RSI near overbought suggest short-term mean reversion is likely. However, Loop Capital’s downgrade and valuation pressures imply consolidation could persist. Monitor Amazon’s -1.06% move for sector sentiment cues. Watch for $114.11 breakdown or a reversal above $127.00 to define the next phase.