Shopify (TSX: SHOP) stock is set to release third-quarter earnings today, and the momentum looks seasonally bearish. The first and third quarters are seasonally weak for Shopify. Thus, the 12% correction in the last 15 days comes as no surprise. In fact, this is an opportunity to buy the stock ahead of the holiday season rally.
Is e-commerce a good investment?
Shopify stock is highly volatile, with a 40%–50% rally and dip being a normal course of trading. The stock surged 40% between September 15 and October 15, in the run-up to the holiday season before a correction. As we enter the holiday season, the stock could see earnings spurt, and this time <a href="https://www.fool.ca/investing/top-canadian-artificial-intelligence-stocks/” rel=”nofollow noopener” target=”_blank”>artificial intelligence (AI) contribution to sales could drive the rally.
Alphabet’srecent earnings showed how its AI Overview on the search engine was affecting its traditional ad revenue. The market is keeping a close watch on AI return on investment (ROI). If Shopify can show a reverse trend to what Alphabet showed, its stock price could grow significantly. Even if it doesn’t, the stock will likely rally 30–40% in the holiday season.
How much Shopify stock do you own?
Although volatile, Shopify is a resilient growth stock that fits multiple investing styles. You can buy the stock directly on the TSX or Nasdaq. Suppose Jemma bought 100 shares of Shopify at $150 per share in May 2026 on the TSX. Is her portfolio exposure to Shopify only limited to 100 shares or $15,000?
Not exactly.
Shopify has 1.2 billion shares trading on the stock exchange, of which 73.8% are owned by institutions. These institutions include mutual funds, ETFs, and wealth managers who hold positions in certain stocks. Jemma buys Shopify stock, but also invests $500 every month in the iShares Canadian Growth Index ETF(TSX: XCG). This ETF has 11.3% holdings in Shopify. So, if she has invested $10,000 in the XCG ETF, she has another $1,130 exposure to Shopify stocks.
The ETF diversifies your exposure to other stocks. You do not pay $150 per share to buy Shopify stock. In an ETF, you pay the net asset value (NAV) per unit, which is calculated as the weighted average value of the portfolio.
The technology ETF with high exposure to Shopify
Since XCG has a higher weightage of 11.3%, Shopify’s stock price volatility influences its NAV. The iShares S&P/TSX Capped Information Technology Index ETF(TSX: XIT) has a 26.3% exposure to Shopify and 30% exposure to Constellation Software. The price momentum in these two stocks significantly influences XIT ETF returns.
