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Hedge fund trading in times of crisis


Shopify (NYSE: SHOP)(EAST: SHOP) offers an Internet commerce platform. A slowdown in e-commerce growth, tough year-over-year comparisons, and the tech selloff amid fears of a recession drove Shopify shares down significantly. Although Shopify stock has fallen significantly (down 77% year-to-date), TipRanks’ Hedge Fund Trading Activity Tool shows that hedge funds remain negative about their outlook.

SHOP Equities: hedge fund activity

According to the tool, hedge funds reduced their holdings of SHOP shares by selling 20.7 million shares in the last quarter. In addition, SHOP shares were among the top five best-selling stocks by hedge funds.

Eight hedge fund managers, including Ray Dalio of Bridgewater Associates and William Duhamel of Route One Investment Company, closed their positions in SHOP shares. Additionally, eight other fund managers reduced their holdings of SHOP shares in the last quarter.

However, three hedge fund managers took advantage of the SHOP headline correction and opened new positions. Meanwhile, an equal number of hedge funds added more SHOP shares to their holdings.

Overall, the tool shows that the hedge fund confidence signal is very negative on SHOP stocks.

What is the prediction for Shopify Stock?

Shopify’s stock forecast on TipRanks shows analysts are cautiously optimistic about SHOP’s outlook. It received 12 buy recommendations and 14 hold recommendations for a moderate buy rating consensus. Moreover, the average price target of $43.02 implies an upside potential of 37.6%.

Although the forecast for SHOP shares shows a decent rise over the next 12 months, it has a negative signal from hedge funds and insiders (corporate insiders sold SHOP shares worth $3 million over the course of the last three months). Overall, the stock has a smart underperforming score of 2 out of 10 on TipRanks.

Final remarks

Slowing e-commerce demand and lingering uncertainty could continue to pose challenges for the SHOP stock. Additionally, hedge funds and company insiders selling SHOP shares are sending a negative signal. However, a reacceleration in e-commerce demand, easing macro headwinds, and Shopify’s investments in growth metrics could push its stock price higher.