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HomeMarketWhy Shopify's New Pricing Plan Is Driving the Stock Higher

Why Shopify’s New Pricing Plan Is Driving the Stock Higher

Shares of Shopify were rising on Wednesday.

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David Kawai/Bloomberg

stock got a lift after the e-commerce company announced changes to its pricing—a move one analyst said positions it for better growth.

“The price we charge for access to the best tools in commerce has remained largely unchanged for the last 12 years,” wrote Kaz Nejatian,
‘s chief operating officer, in a blog post announcing the changes.

“The idea behind the products we create has always been the same: we offer merchants the most powerful, innovative, and reliable tools in the industry at a price that’s unmatched in the market,” she wrote. “But what that means, and the resources required to live up to that promise, have changed dramatically since we started.”

Shopify’s Basic plan will cost $39 a month, up from $29; its Shopify plan will rise to $105 from $79; and its Advanced plan will jump to $399 from $299. Merchants who already use Shopify won’t be affected for three months.

The Basic plan includes basic reports and two staff accounts, the Shopify plan includes professional reports and five staff accounts, and the Advanced plan includes a custom report builder and 15 staff accounts, according to the Shopify website.

“In order to not change the value of Shopify, we’ve had to change the price,” Nejatian wrote.

Oppenheimer analysts, led by Ken Wong, believe the changes will spark growth in fiscal 2023. He said investors will have to take account of the likelihood that some companies will stop using Shopify, but he noted that competitors including
com (
) and
) have increased their prices with “minimal impact on retention.” And with competitors charging more, users are less likely to move their business elsewhere, he said.

“Shopify is still significantly underpriced relative to enterprise commerce offerings, in our view,” Wong said. He has an Outperform rating on the stock with a target of $45 for the price. 

Shopify (ticker: SHOP) shares jumped 9.7% to $46.83 Wednesday. Over the past 12 months, shares have tumbled about 46%. 

The company will post its fourth-quarter earnings on Feb. 15. 

Write to Emily Dattilo at emily.dattilo@dowjones.com

Credit: marketwatch.com

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