AC Investment Research

SHOP:TSX Shopify Inc. Research Report

Outlook: Shopify Inc. assigned short-term Ba1 & long-term Ba1 estimated rating.
Dominant Strategy : Hold
Time series to forecast n: 28 Dec 2022 for (n+1 year)
Methodology : Inductive Learning (ML)

Abstract

Impact of many factors on the stock prices makes the stock prediction a difficult and highly complicated task. In this paper, machine learning techniques have been applied for the stock price prediction in order to overcome such difficulties. In the implemented work, five models have been developed and their performances are compared in predicting the stock market trends.(Huang, Y., Capretz, L.F. and Ho, D., 2021, December. Machine learning for stock prediction based on fundamental analysis. In 2021 IEEE Symposium Series on Computational Intelligence (SSCI) (pp. 01-10). IEEE.) We evaluate Shopify Inc. prediction models with Inductive Learning (ML) and Polynomial Regression1,2,3,4 and conclude that the SHOP:TSX stock is predictable in the short/long term. According to price forecasts for (n+1 year) period, the dominant strategy among neural network is: Hold

Key Points

  1. What is the best way to predict stock prices?
  2. Operational Risk
  3. Why do we need predictive models?

SHOP:TSX Target Price Prediction Modeling Methodology

We consider Shopify Inc. Decision Process with Inductive Learning (ML) where A is the set of discrete actions of SHOP:TSX stock holders, F is the set of discrete states, P : S × F × S → R is the transition probability distribution, R : S × F → R is the reaction function, and γ ∈ [0, 1] is a move factor for expectation.1,2,3,4


F(Polynomial Regression)5,6,7= p a 1 p a 2 p 1 n p j 1 p j 2 p j n p k 1 p k 2 p k n p n 1 p n 2 p n n X R(Inductive Learning (ML)) X S(n):→ (n+1 year) i = 1 n r i

n:Time series to forecast

p:Price signals of SHOP:TSX stock

j:Nash equilibria (Neural Network)

k:Dominated move

a:Best response for target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do AC Investment Research machine learning (predictive) algorithms actually work?

SHOP:TSX Stock Forecast (Buy or Sell) for (n+1 year)

Sample Set: Neural Network
Stock/Index: SHOP:TSX Shopify Inc.
Time series to forecast n: 28 Dec 2022 for (n+1 year)

According to price forecasts for (n+1 year) period, the dominant strategy among neural network is: Hold

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Grey to Black): *Technical Analysis%

IFRS Reconciliation Adjustments for Shopify Inc.

  1. A similar example of a non-financial item is a specific type of crude oil from a particular oil field that is priced off the relevant benchmark crude oil. If an entity sells that crude oil under a contract using a contractual pricing formula that sets the price per barrel at the benchmark crude oil price minus CU10 with a floor of CU15, the entity can designate as the hedged item the entire cash flow variability under the sales contract that is attributable to the change in the benchmark crude oil price. However, the entity cannot designate a component that is equal to the full change in the benchmark crude oil price. Hence, as long as the forward price (for each delivery) does not fall below CU25, the hedged item has the same cash flow variability as a crude oil sale at the benchmark crude oil price (or with a positive spread). However, if the forward price for any delivery falls below CU25, the hedged item has a lower cash flow variability than a crude oil sale at the benchmark crude oil price (or with a positive spread).
  2. When an entity discontinues measuring the financial instrument that gives rise to the credit risk, or a proportion of that financial instrument, at fair value through profit or loss, that financial instrument's fair value at the date of discontinuation becomes its new carrying amount. Subsequently, the same measurement that was used before designating the financial instrument at fair value through profit or loss shall be applied (including amortisation that results from the new carrying amount). For example, a financial asset that had originally been classified as measured at amortised cost would revert to that measurement and its effective interest rate would be recalculated based on its new gross carrying amount on the date of discontinuing measurement at fair value through profit or loss.
  3. That the transferee is unlikely to sell the transferred asset does not, of itself, mean that the transferor has retained control of the transferred asset. However, if a put option or guarantee constrains the transferee from selling the transferred asset, then the transferor has retained control of the transferred asset. For example, if a put option or guarantee is sufficiently valuable it constrains the transferee from selling the transferred asset because the transferee would, in practice, not sell the transferred asset to a third party without attaching a similar option or other restrictive conditions. Instead, the transferee would hold the transferred asset so as to obtain payments under the guarantee or put option. Under these circumstances the transferor has retained control of the transferred asset.
  4. Lifetime expected credit losses are not recognised on a financial instrument simply because it was considered to have low credit risk in the previous reporting period and is not considered to have low credit risk at the reporting date. In such a case, an entity shall determine whether there has been a significant increase in credit risk since initial recognition and thus whether lifetime expected credit losses are required to be recognised in accordance with paragraph 5.5.3.

*International Financial Reporting Standards (IFRS) adjustment process involves reviewing the company's financial statements and identifying any differences between the company's current accounting practices and the requirements of the IFRS. If there are any such differences, neural network makes adjustments to financial statements to bring them into compliance with the IFRS.

Conclusions

Shopify Inc. assigned short-term Ba1 & long-term Ba1 estimated rating. We evaluate the prediction models Inductive Learning (ML) with Polynomial Regression1,2,3,4 and conclude that the SHOP:TSX stock is predictable in the short/long term. According to price forecasts for (n+1 year) period, the dominant strategy among neural network is: Hold

SHOP:TSX Shopify Inc. Financial Analysis*

Rating Short-Term Long-Term Senior
Outlook*Ba1Ba1
Income StatementB2B2
Balance SheetBaa2C
Leverage RatiosBaa2B3
Cash FlowCBaa2
Rates of Return and ProfitabilityCaa2Baa2

*Financial analysis is the process of evaluating a company's financial performance and position by neural network. It involves reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement, as well as other financial reports and documents.
How does neural network examine financial reports and understand financial state of the company?

Prediction Confidence Score

Trust metric by Neural Network: 75 out of 100 with 862 signals.

References

  1. J. Filar, L. Kallenberg, and H. Lee. Variance-penalized Markov decision processes. Mathematics of Opera- tions Research, 14(1):147–161, 1989
  2. Gentzkow M, Kelly BT, Taddy M. 2017. Text as data. NBER Work. Pap. 23276
  3. Burkov A. 2019. The Hundred-Page Machine Learning Book. Quebec City, Can.: Andriy Burkov
  4. Wooldridge JM. 2010. Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press
  5. Wager S, Athey S. 2017. Estimation and inference of heterogeneous treatment effects using random forests. J. Am. Stat. Assoc. 113:1228–42
  6. Harris ZS. 1954. Distributional structure. Word 10:146–62
  7. Ashley, R. (1988), "On the relative worth of recent macroeconomic forecasts," International Journal of Forecasting, 4, 363–376.
Frequently Asked QuestionsQ: What is the prediction methodology for SHOP:TSX stock?
A: SHOP:TSX stock prediction methodology: We evaluate the prediction models Inductive Learning (ML) and Polynomial Regression
Q: Is SHOP:TSX stock a buy or sell?
A: The dominant strategy among neural network is to Hold SHOP:TSX Stock.
Q: Is Shopify Inc. stock a good investment?
A: The consensus rating for Shopify Inc. is Hold and assigned short-term Ba1 & long-term Ba1 estimated rating.
Q: What is the consensus rating of SHOP:TSX stock?
A: The consensus rating for SHOP:TSX is Hold.
Q: What is the prediction period for SHOP:TSX stock?
A: The prediction period for SHOP:TSX is (n+1 year)

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