5 Innovative Stocks in Cathie Wood’s Portfolio That Failed to Impress

4. Shopify Inc. (NYSE:SHOP)

Number of Hedge Fund Holders: 86

Decline in Share Price in the Last 6 Months: 55.33%

Cathie Wood lowered her Shopify Inc. (NYSE:SHOP) stake by 23% in Q4 2021, and her hedge fund owned 715,230 shares of the company, worth over $985 million, representing 2.97% of the fund’s 13F portfolio. Shopify Inc. (NYSE:SHOP) is a Canadian multinational e-commerce company. 

On February 16, Shopify Inc. (NYSE:SHOP)’s Q4 results were published, and the company posted earnings per share of $1.36, above consensus by $0.05. The $1.38 billion revenue jumped 41.14% year-on-year, surpassing estimates by $38.40 million. 

DA Davidson analyst Tom Forte lowered the price target on Shopify Inc. (NYSE:SHOP) on February 17 to $800 from $1,400 and kept a Neutral rating on the shares as he resets his expectations for what success looks like for Shopify Inc. (NYSE:SHOP). The analyst also lowered his long-term adjusted EBITDA margin forecast to 30% from 45% on the expectation that spending for sales and marketing, R&D, and G&A will be higher than his previous forecasts, at maturity. 

Among the hedge funds tracked by Insider Monkey, 86 hedge funds were bullish on Shopify Inc. (NYSE:SHOP) in Q4 2021, up from 73 funds in the preceding quarter. Stephen Mandel’s Lone Pine Capital held the biggest stake in Shopify Inc. (NYSE:SHOP), with 1.3 million shares worth $1.9 billion.

Here is what RiverPark Large Growth Fund has to say about Shopify Inc. (NYSE:SHOP) in its Q4 2021 investor letter:

“Shopify: SHOP shares were down modestly for 2H21, and we attribute the decline to the market environment rather than anything company specific, as Shopify’s fundamentals remain exceptional. The company reported $42 billion of merchandise sales, a 35% year-over-year increase, leading to 46% revenue growth to $1.1 billion for its 3Q. Subscription solutions revenue grew 37% year over year.

Last year, $120 billion (9%) of US retail e-commerce sales flowed through SHOP, which was second only to Amazon, and up from $61 billion for 2019. The company is still enjoying significant tailwinds as retail merchants of all sizes rapidly adopt SHOP’s software tools to display, manage and sell their products across a dozen different sales channels. We believe that the overall growth of e-commerce, combined with the development of new products and services at SHOP, will continue to drive revenue growth of about 50% per year over the next several years, accompanied by continued operating margin expansion.”