What happened
Shares of Shopify (SHOP 1.11%) rose 17.1% in January, according to data from S&P Global Market Intelligence. The provider of e-commerce solutions mainly for small businesses saw a mixed bag of analyst reports in January, leading up to this Wednesday's fourth-quarter earnings report. Investors largely shrugged off the bearish notes to focus on Wall Street's bullish side.
So what
The bulls often cited signs of strong fourth-quarter revenue growth, usually based on each firm's internal market surveys. Even the bears agree that Shopify should deliver "robust" results in this week's report, though they also note that the stock price appears to have absorbed these good vibrations -- Shopify's shares have gained 246% since the start of 2019, after all, and the stock trades at a lofty 514 times forward earnings estimates.
Image source: Getty Images.
Now what
Shopify is a classic growth stock, trading at crazy valuation ratios such as 39 times trailing sales and 19 times the company's book value based on the promise of rampant revenue growth. This stock could be a great long-term buy, but only if you have the patience to ride out many sudden jumps and drastic drops as Shopify's business story develops.
