Shopify plunged by 18.6% and AEM sank by 12.9%!

The only time when I felt good to see the stock price plunged was when I wanted to add on to my position.

This was not that occasion, at least not yet.

I only felt “xian” (Singlish – loosely translate to bored) for a while.

Here’s why I could still sleep well at night.

Bought with my eyes opened and for the future

For AEM, the weak results was not unexpected. In fact, I did not have any expectation on its results this year.

Its potential growth from FY2025 onwards was tantalising enough for me to take a stake a few weeks ago.

If they really get it right, then it really doesn’t matter if I bought the shares at $2.3+ or at the latest price of $1.97.

For Shopify, 1Q2024 results was actually good.

As seen from the above image, the performance metric are all to the North of 20%.

However market was spooked by its 2Q2024 guidance when it guided only for a high teen growth for its revenue.

High teen growth doesn’t sound too bad isn’t it?

However, given that Shopify’s valuation is sky high, any guidance below expectation would be punished.

I am not too bothered by its quarterly guidance. With its strong business, I am confident of its long term prospect.

Small position size

One mistake I made with Shopify was buying too much at too high a price in early days.

Hence, when the US market plunged in 2022, I could only average down a bit, as I wanted a smaller position size for my growth counters.

This is my way of managing down side as I do not practise stop loss purely by price movement. This strategy has limited the impact from a wrong stock pick.

Before the recent plunge, Shopify and AEM took up about 2.3% and 1.4% of my portfolio respectively.

Hence, my portfolio weathered the drop quite well, especially when my heavy weight Arista Networks reported a surprisingly strong 1Q and its price went up 6% on the same day.

Buying more?

I decided to wait a while.

There’s no hurry to add, especially when I have limited fund currently.

I will just hold on to my current holdings.

Sharing this good analysis by Brian Stoffel on Shopify’s first quarter results.

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