With More Pointing to a Drop Rather Than a Pop, Hold Off on Shopify

• After cratering during the market sell-offs earlier this year, positive news has kept Shopify (SHOP) from falling further.
• However, this news does little to change the story, don't view this as a sign that there's a recovery ahead.
• Instead, as growth continues to slow down, expect a further drop for SHOP stock.

Source: Burdun Iliya / Shutterstock.com

Like similar pandemic-era high-fliers, shares inShopify(NYSE:SHOP) have seen a big price cut so far in 2022. Adjusting forits recent stock split, SHOP stock started off the year changing hands for around $136.31 per share.

Today? It’s trading for around $35 per share. That’s a more than a 74% drop. Yes, over the past month, shares in the e-commerce software provider have more or less been rangebound. A bit of positive news (more below) helped the stock perk back up, after falling to a new 52-week low following its June 29 stock split.

However, I wouldn’t view its recent rangebound performance as a sign that it’s bottomed out. Much less, gearing up for a recovery. Why? Shopify’s growth is slowing down. This points to further drops, until its valuation more accurately takes this into account. As before, avoiding it is your best move.

Latest News Does Little to Change the Story

Given current market conditions, it’s not surprising Shopify’s stock split had the opposite effect on its share price. The above-mentioned is the latest positive news with the company– and is  somewhat having an impact on shares.

Even as it does little to change the story with SHOP stock — what is this latest development? AsInvestorPlace’sWilliam White reported July 21, shares saw a boost on news of the companyforming a partnershipwithAlphabet’s(NASDAQ:GOOGL,NASDAQ:GOOG) YouTube platform.

In a nutshell, the deal between the two companies basically enables YouTube content creators to integrate their Shopify-powered online stores onto their channels, enabling fans to purchase merchandise without leaving the site. Yet, while this is possibly a great monetization effort for YouTube, it is also a minor positive for Shopify. But it is not big enough of a development to solve what the company’s largest issue is right now.

The issue? Slowing growth. As the pandemic boom times for e-commerce are now in the rearview mirror, the growth slowdown we’ve seen in recent quarters is likely to continue. This will put more pressure on the stock.

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