Shopify stock is a better pick than Amazon: Mark Mahaney explains why
Shopify Inc (NYSE: SHOP) has been rather flaccid while Amazon.com Inc (NASDAQ: AMZN) has been a darling since the start of 2024.
But all it does is make SHOP a lot more attractive to own in July than its larger rival AMZN, as per Mark Mahaney – the head of internet research at Evercore ISI.
Mahaney added Shopify stock to his list of long ideas today while Amazon shares were added to his tactical underperform list.
Shopify stock has a 20% upside from here
Mark Mahaney is bullish on Shopify as it’s a “best-in-class eCommerce platform”. His $75 price target on SHOP translates to about a 20% gain from here.
The senior Evercore ISI analyst sees Shopify stock as a “very resilient long thesis” as it has a rather huge total addressable market (TAM) of about $850 billion.
He recommends investing in the Canadian multinational also for its “clear track record of successful production innovation”.
Watch here: https://www.youtube.com/embed/s65RlsPi0No?feature=oembedSHOP may swing to profit in its fiscal Q2
Mark Mahaney expects Shopify Inc to “materially ramp profitability” moving forward. Its free cash flow margins, he added, could accelerate from 12% at the moment to high-teens levels by the year 2026.
Shopify Inc is scheduled to report its financial results for the second quarter in early August. Consensus is for it to earn 11 cents a share – up sharply from a loss of 8 cents per share last year.
Also on Tuesday, analysts at the Bank of America Securities also raised their rating on Shopify shares to “buy”. They even added the eCommerce giant to their list of global “best of breed” stocks.
Nonetheless, SHOP is not for you if you’re an income investor since it doesn’t pay a dividend at writing.
Amazon stock added to tactical underperform list
A surprising underperformer over the next twelve months, as per Mark Mahaney of Evercore ISI, could be Amazon.com Inc.
The head of internet research added AMZN to his tactical underperform list today as he’s not convinced that the eCommerce behemoth can match expectations for $15.3 billion in operating income in the third quarter.
Nonetheless, it’s not like Mahaney essentially dislikes Amazon stock now. His research note reads:
“Given AMZN’s very consistent guidance pattern, the company is not likely to bracket with its guidance unless it has material Q2 OI upside. We refer to this as an expectations trip-up issue and not a fundamental issue.”
Earlier this month, Amazon founder Jeff Bezos disclosed plans of selling $5.0 billion worth of AMZN shares.
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