Shopify Shares Tumble Amid Five-Day Slump but Remain a Long-Term Winner

Shopify recently witnessed a notable stock downturn, with a decline marked recently by a five-day losing streak culminating in a 3.92% drop. Despite this near-term volatility, the Canadian e-commerce platform has demonstrated impressive performance over the past six months, climbing over 73% and remaining above key moving averages.

Investors have turned their attention to Shopify's strong financial results. In Q4 2024, Shopify reported a 29% increase in earnings per share, reaching 44 cents. Additionally, revenue grew by 31% year-over-year to reach $2.81 billion, surpassing analyst expectations. This has reinforced Shopify's leading position in the industry, maintaining high rankings in composite, EPS, and relative strength scores.

Due to its robust fundamentals, analysts are optimistic about Shopify's outlook. A notable investment bank recently increased its price target from $110 to $130, retaining a 'hold' rating, which reflects market confidence in the company's future growth. Despite not offering dividends, investors can pursue additional income by selling covered call options. However, this strategy may limit potential upside.

For investors considering Shopify in the current market landscape, selling long-term covered calls could be a prudent strategy. For instance, January 2026 calls with a strike price of $140 could generate about $2,000 per contract, reducing the net investment cost and providing additional income. However, if Shopify's share price exceeds $140, investors would miss out on further gains.

Overall, such strategies require careful consideration of their benefits and drawbacks. While covered calls can offer downside protection and extra income, they also cap potential upside. Options trading carries inherent risks, urging investors to conduct thorough due diligence and consult financial advisors as necessary.