Setting up your own business can be an impenetrable jungle of tax rules and assorted regulations that can, somehow, make selling knit scarves into a kind of nightmare. But Shopify (TSE:SHOP) (NYSE:SHOP), the Canadian kingpin for building online stores, is out to make it easier with a newly expanded partnership with Avalara. Oddly, investors didn’t take this well at all and sent Shopify shares down over 2% in Tuesday morning’s trading.
The partnership between Shopify and Avalara isn’t new; the duo have been working together for some time now in a bid to simplify the connection between newly-minted online businesses and government demands for their cut. Now, it just got a little easier, as Avalara is bringing out automated global tax compliance systems to add to Shopify’s roster. Whether it’s straight sales tax, value-added tax, or even exemption certificate needs, Avalara can bring them all into the fray, building on a connection that’s been in place since 2015.
Further Refinements Don’t Help Much
Shopify also got together with Loqate to produce a new address verification service that helps ensure Shopify Plus merchants send things to the right places. That, in turn, reduces delivery failures and improves customer experience. Yet, despite all these new features, Shopify’s growth has been visibly slowing these past few years. Such a decline was likely inevitable, as a lot of Shopify’s interest was front-loaded during the pandemic when businesses had little choice but to go online in the face of government shutdowns.
Is Shopify a Buy or Hold?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SHOP stock based on 15 Buys, 14 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 5.84% loss in its share price over the past year, the average SHOP price target of C$105.36 per share implies 34.17% upside potential.
