Shopify’s stock takes cues from Palantir Technologies: What does history say the future holds?

On March 31, Shopify made a strategic move by delisting its shares from the New York Stock Exchange and listing them on the Nasdaq. While no explicit reason was given, many speculate that this action paves the way for a potential inclusion in the Nasdaq-100. This move is inspired by a similar move by Palantir Technologies last year, whose inclusion boosted its stock price. In this article, we will explore how history suggests that Shopify’s Nasdaq listing could open up new growth opportunities for the company and its investors.

Why Shopify Is Taking a Leap of Faith from Palantir Technologies

Shopify made the strategic choice to relist its shares on the Nasdaq, a move that appears to be inspired by Palantir Technologies. Last year, Palantir relisted its shares with the same objective and successfully added itself to the Nasdaq-100. Since its inclusion on December 23, Palantir’s shares have risen 7% as of April 2, despite declines in the three major US stock indices over the same period.

The Potential Benefits of Inclusion in the Nasdaq 100

The Nasdaq 100 reflects the performance of 100 large companies listed on the Nasdaq. Each December, this index is revised to add or remove stocks. The significance lies in the various investment products linked to the index, which control hundreds of billions of dollars.

When a company is listed on the Nasdaq 100, funds like the Invesco QQQ Trust are forced to buy its shares to closely track the benchmark index. This increased demand can then boost the stock price. Shopify’s delisting could therefore make it a potential candidate, thanks to its current market value of $131 billion, placing it among the 35 largest companies on the Nasdaq.

The Growth Opportunity for Shopify

Shopify is a market leader in e-commerce software, offering pragmatic solutions for omnichannel commerce. The company helps merchants manage their businesses across both physical and digital stores, encompassing online platforms, social media, mobile apps, and branded websites. Shopify is supported by adjacent tools for marketing, logistics, and payment processing. With significant market share in the United States and Western Europe, Shopify is the second-largest e-commerce platform after Amazon. Retail e-commerce spending is expected to grow 11% annually through 2030, giving Shopify an excellent market position.

Shopify’s Financial Outlook

The company’s efficiency was evident in operating expenses, which reached their lowest level as a percentage of revenue since Shopify went public in 2015. Additionally, the commission rate increased by 12 basis points in the fourth quarter, meaning Shopify kept a little more of every dollar spent on its platform.

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