The Major Catalysts for This
The Major Catalysts for
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
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.
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
Amazon recently set up a whole committee just to deal with the “Shopify
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.
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
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 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:
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.
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."
number of research analysts have recently issued reports on the stock.....
Bank Financial lifted their target price on shares of Shopify from $1,400.00 to
$1,650.00 and gave the company an “outperform” rating in a research note on
Friday, February 19th.
Research assumed coverage on shares of Shopify in a research note on Friday,
December 4th. They issued a “buy” rating and a $1,206.00 target price for the
lifted their target price on shares of Shopify from $1,350.00 to $1,650.00 and
gave the company an “overweight” rating in a research note on Wednesday,
Truist boosted their price objective on shares of Shopify from $1,100.00 to
$1,475.00 in a research report on Thursday, February 18th.
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.