OTTAWA, CANADA – Shopify Inc. (NYSE: SHOP) investors were hit with a significant sell-off on Thursday, June 13, as the e-commerce leader’s stock plunged over 3.5%. The day was characterized by a massive gap down at the open and a failure to mount any meaningful recovery, establishing a deeply bearish technical picture that has traders on high alert for further declines when the market reopens on Monday.
This in-depth analysis of Thursday’s trading session breaks down the critical signals for Shopify stock.
Thursday’s Trading Recap: A Day of Clear Weakness
Shopify stock closed the session at
3.87 (-3.54%). The intraday chart tells a clear story of seller dominance:
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Major Gap Down: The stock opened at $105.53, a huge drop from the previous day’s close of $109.21. This indicates overwhelming selling pressure before the market even opened.
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A Feeble Rally Attempt: Buyers tried to push the stock higher in the morning, reaching a daily high of $107.01. This rally was extremely weak, failing to come anywhere close to the previous day’s close, a major sign of technical weakness.
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Persistent Selling: After the rally attempt failed, the stock resumed its downtrend, grinding lower for most of the session.
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Finding a Late-Day Floor: The stock hit its daily low of $104.66 in the afternoon before finding some stability and trading sideways into the close.
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A Glimmer of Hope After Hours: In a small but notable positive sign, the stock ticked up to $105.60 (+0.25%) in after-hours trading, suggesting some dip-buyers saw value after the bell.
The Bear Case: Why Shopify Stock Is in a Precarious Position
The technical evidence from Thursday is overwhelmingly bearish, pointing to a high probability of more downside:
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The Huge Gap Down: A gap down of this magnitude shows a significant and negative shift in sentiment. The stock was unable to fill this gap, which now represents a massive wall of overhead resistance.
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Extremely High Valuation: With a Price-to-Earnings (P/E) ratio of 85.49, Shopify is a high-growth stock with a premium valuation. This makes it extremely sensitive to any bad news or market weakness, as investors are quick to take profits and reassess risk.
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Failed Rally: The inability of the stock to mount a serious recovery after the gap down is a powerful confirmation that sellers are in complete control.
The Bull Case: Is There a Silver Lining?
Despite the brutal daily chart, bulls have a few points to hold onto:
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After-Hours Buying: The small after-hours pop is the most significant bullish signal of the day. It shows that at these lower prices, some buyers are willing to step in, which could help form a support base.
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Support at the Low: The selling did stop at $104.66. If this level holds on Monday, it could serve as a short-term floor for the stock.
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E-commerce Leadership: Shopify remains a dominant platform in the massive and growing e-commerce industry. Its long-term growth story is still compelling for many investors.
Key Levels for Traders to Watch on Monday
The battle on Monday will be fought around the lows of Thursday’s session.
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Critical Support Level: $104.66 (Thursday’s Low). This is the absolute key level to watch. A break below this would signal that the selling pressure is continuing and could lead to a swift move lower.
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Key Resistance Level: $107.01 (Thursday’s High). Before bulls can even begin to repair the technical damage, they need to push the price back above this weak rally high.
The Verdict: Is It Right to Invest?
Given the significant daily loss, the high valuation, and the overwhelmingly bearish technical pattern, the forecast for Shopify stock is bearish for Monday. The after-hours pop provides a small ray of hope, but the weight of the evidence points to a high risk of further declines.
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For Short-Term Traders: This is a high-risk situation. Buying this dip could be like catching a falling knife. A break below $104.66 would be a strong bearish signal. Traders should be extremely cautious.
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For Long-Term Investors: A 3.5% drop in a high-P/E stock is significant and could be the start of a larger correction. While the long-term story may be intact, it may be prudent to wait for the price to stabilize and form a clear base before considering an investment.
The first hour of trading on Monday will be critical. Watch to see if buyers can defend the $104.66 low or if sellers press their advantage.
Disclaimer: This article is for informational purposes only and is not financial advice. All investment decisions should be made with the help of a qualified financial professional.
