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March 27, 2021
Shopify, a part of Cathie Wood’s Ark Investment, which has been one of the catalysts for this trade; but also includes looking at the past earnings report, analysts’ positivity, Baron Funds investment and coping with Amazon competition; which has helped provide a profitable day.
“Weekly Options Members” managed to gain a potential profit of 203% within the trading day.
Another trade maybe considered – don’t miss out.
The Actual Recommended Trade
** OPTION TRADE: Buy SHOP APR 01 2021 1100.000 CALLS at approximately $13.00.
The Profit Explained…..
This turned into a two-part trading day for Shopify options trading…..
1. “Weekly Options Members” entered a trade on Shopify Friday, March26, 2021 for $14.56, at market opening.
By 10.50am the price of the option had hit $18.70 – a nice profit of 28%.
(This was based around a note sent to members at the time of the recommendation -- Watch the market carefully and keep your trade tight.
2. Re-enter the trade at 11:14am at a price of $6.00.
Exit the trade at 3:50pm at $16.50 – 175% potential profit.
TOTAL PROFIT FOR THE DAYS TRADING IS 203%
Why The Trade Recommendation On Shopify?
Shopify Inc (NYSE: SHOP), the Canadian e-commerce services company that helps companies build their own websites, launch marketing campaigns, process payments, and fulfill orders -- thrived throughout the pandemic as smaller businesses relied heavily on online orders.
Shopify now serves more than a million businesses worldwide, and its decentralized self-service platform continues to attract merchants that don't want to be tethered to Amazon (NASDAQ:AMZN).
About Shopify …..
Shopify Inc, a commerce company, provides a commerce platform and services in Canada, the United States, the United Kingdom, Australia, Latin America, and internationally.
The company's platform provides merchants to run their business in various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, and access financing.
The Major Catalysts for This Trade.....
In the fourth quarter (reported on Feb. 17), Shopify's sales jumped 94% and the company's earnings popped 267%. That growth was sparked by rising subscription sales, up 53% year over year, and merchant solutions revenue, up 117% from the year-ago quarter.
People are spending more money than ever on Shopify's platform, as gross merchandise volume (GMV) exceeded $41 billion and reached $120 billion for 2020. That's up 96% from 2019.
Despite these impressive numbers, Shopify's stock is down about 5% over the past three months. The slide has occurred as some investors have exited the tech sector in search of other areas of growth, as the U.S. economy begins to open back up.
Online sales accounted for just 16% of all retail sales in the U.S. at the end of 2020, leaving substantial room for more growth in the coming years.
And with many people now accustomed to buying things online, particularly after this past year, it's likely that the e-commerce market will accelerate even faster than it was before COVID-19.
With Shopify's stock taking a slight hit over the past few months, it's a great time to buy shares of this fast-growing tech stock.
Shopify, Canada's most valuable company, is one of the few e-commerce companies Amazon just can't seem to beat. Unlike Amazon, which herds third-party merchants into a crowded marketplace filled with its own first-party goods, Shopify helps businesses build their own online presences with tools for creating e-commerce sites, launching marketing campaigns, processing payments, and fulfilling orders.
Amazon recently set up a whole committee just to deal with the “Shopify threat.”
According to Josh Rubin of the Toronto Star, Amazon set up the committee–known as “Project Santos”–to fight Shopify. Reporting by Marketplace Pulse goes on to say that the top-secret Amazon project aims to replicate parts of Shopify’s business model.
If that’s true, it should come as no surprise. Shopify has reportedly been taking business from Amazon, attracting many top vendors to its own platform. With much lower fees and more creative control, Shopify’s platform does offer vendors many advantages.
Recently, a number of top Amazon vendors have moved to Shopify. In most cases, they didn’t stop selling on Amazon in order to start Shopify stores. However, the fact that they’re now on Shopify means that Shopify’s share of their sales is increasing. Some top Amazon vendors getting on the Shopify train include Bulletproof, Hasbro and Penguin Books.
Shopify’s cut of fees is much lower than Amazon’s, and Amazon has been increasing its cut while Shopify has kept its cut flat over the years.
Baron FinTech Positivity.....
Baron Funds, an investment management firm, published its fourth quarter 2020 “Baron FinTech Fund” investor letter, which mentioned Shopify.
Since the beginning of the year, SHOP delivered a 2.65% return, impressively extending its 12-month gains to 170.23%. As of March 23, 2021, the stock closed at $1,162.00 per share.
Here is what Baron FinTech Fund has to say about Shopify Inc. in their Q4 2020 investor letter:
"During the quarter, we initiated a position in Shopify Inc., a provider of commerce and payment solutions for merchants of all sizes. Over one million merchants around the world use Shopify's software to run their businesses through E-commerce websites and apps, physical retail locations, social media storefronts, and marketplaces. The Shopify platform addresses many of the challenges of running a retail business, such as selling across multiple channels, managing inventory, processing orders and payments, fulfillment, shipping, and accessing capital. Shopify's solutions operate in the cloud, enabling faster product innovation and the ability to provide unique data insights to merchants about demand, pricing. and shipping optimization. The platform integrates with over 5,000 apps from third-party providers, creating two-sided network effects as the large number of merchants attract more partners and vice versa. About half of the company's revenue comes from FinTech solutions, including processing payments, lending, and business banking services.
We expect Shopify will be a prime beneficiary of the secular growth of Ecommerce. Gross merchandise volume on the Shopify platform was $100 billion over the last 12 months, which is large but still only 5% of global online sales and 0.5% of global commerce sales (online and offline) excluding China, implying a very long runway for growth. We expect Shopify's sales volume to grow faster than the e-commerce market due to an expanding set of capabilities, geographic expansion, and a singular focus on helping merchants succeed. We expect Shopify to better monetize the sales volume on its platform by increasing penetration of its payments, lending, business banking, and fulfillment services. Shopify's take rate and operating margin should meaning fully expand over time as the company provides additional solutions to its merchant customers."
A number of research analysts have recently issued reports on the stock.....
One investment analyst has rated the stock with a sell rating, fifteen have given a hold rating and fourteen have assigned a buy rating to the stock. The company has a consensus rating of “Hold” and an average target price of $1,282.23.
Admittedly, it's not likely that Shopify's stock will rise another 185% as it did in 2020, but it's likely that the tech stock will easily outpace the S&P 500's returns. That's because Shopify isn't finished tapping into the fast-growing e-commerce market.
Consider that at the end of 2020 online sales accounted for just 16% of all retail sales in the U.S. That still leaves a lot of room for Shopify to expand its platform as more businesses shift to online sales in the coming years.
In short, e-commerce is still in its early stages, Shopify is in a leading position, and the company's stock is currently down from its recent highs.
Will Shopify Continue To Provide Profit?
Will We Recommend Another Trade On Shopify?
What Other Trades Are We Anticipating?
Do You Wish To Be Part Of This Action?
For answers, join us here at Weekly Options USA, and get the full details on the next trade.
While there are many more areas that can help to explain option trading, this is a basic overview of what stock options are, and where and how they started.
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