In a recent earnings report, e-commerce software giant Shopify (NYSE: SHOP) experienced a significant drop in its stock value as it failed to meet Wall Street's expectations for the second quarter. However, Oppenheimer, a Wall Street firm, remains optimistic about the company's prospects and has reaffirmed its bullish outlook on Shopify.

Following the earnings release, Shopify's stock plummeted by approximately 20%, triggering concerns among investors. The company's guidance for the second quarter fell short of expectations, leading to the sell-off. Despite this setback, Oppenheimer maintains an outperform rating on Shopify and holds a price target of about $90, suggesting a potential upside of roughly 45% from current prices.

Oppenheimer analyst noted that while the company missed elevated investor expectations, Shopify's fundamental business remains strong. The sell-off was deemed to be an overreaction to the disappointment, especially considering that the company beat headline estimates. The analyst believes that the recent decline in stock value was unwarranted and sees an opportunity for the stock to recover and reach its target price.

However, Shopify has encountered some challenges in delivering consistent profits according to generally accepted accounting principles (GAAP). Despite dominating the software for online retailers industry and maintaining strong top-line growth, investors are keen to see substantial results on the bottom line. The company's valuation continues to be high, with a price-to-sales ratio of around 11.

Shopify's stock has experienced a decline of approximately one-third since its peak before the fourth-quarter earnings report in February. This consecutive decline in earnings has raised concerns among investors in the fast-growing e-commerce stock. To regain investor confidence and reach the $90 mark, Shopify will need to demonstrate consistent profitability.

Investors considering Shopify should take into account the analysis provided by The Motley Fool Stock Advisor analyst team. The team has identified the top 10 stocks they believe offer the highest potential returns for investors. While Shopify did not make the list, these selected stocks have shown the potential to generate significant returns in the coming years. The Motley Fool Stock Advisor service provides a comprehensive blueprint for investment success, including portfolio-building guidance and regular analyst updates, as well as two new stock picks each month.

As of now, Jeremy Bowman, the writer of this article, has positions in Shopify. The Motley Fool also discloses that they have positions in and recommend Shopify.