Q: SHOP has reacted quite harshly downwards to the Fed's expected reduction in 2025 rate cuts. SHOP has been hit much harder than most others. Can you comment on the Fed action and what impact it might have on SHOP? Can you detail why the FED expectation has spooked SHOP? Does it change the narrative and 5i's view on the company as among the top picks for growth?
5i Research Answer:
SHOP rose $7.66 in the first two days of the week, so its Wednesday decline of $12.52 seems less harsh considering that. For the week, it is down $4.86 and remains up 51% for the year. In a sell off, the stocks that are up a lot often see harsher declines. We would certainly not read too much into a one-day move. We have mutliple comments on the FED's move today in the Q&A. SHOP, due to its business, does have some overall economic sensitivity. But we would note the economy is still quite strong (less so in Canada) and this is why the FED is being more cautious. We would not expect SHOP's business to be materially impacted, and would continue to see it as one of the preferred growth stocks over the next several years.