SHOP - Deep Dive (up 2500%)
We recommended Shopify Inc. (SHOP) on 8/24/2016 at just $41. We were quick to spot a potential e-commerce rising star, and how right were we! Today, we are sitting on a neat profit of over 2500%, with the stock nearing the $1100 mark. Another terrific outcome of our persistent research and forward looking ability. Congratulations! So what is next for SHOP after such a terrific run?
EPS - $1.05 beats by $1.03.
Revenue - $714.34 million beats by $202.78 million, up 96% YoY.
Gross merchandise volume (GMV) $30.1 billion. Beats by $10.2 billion (Spike of 119% YoY)
Subscription revenue up to $196.4 million vs. consensus of $192 million.
People are clearly spending more time indoors, than outdoor due to the pandemic constraints. Online spending is at its peak.
This has pushed many businesses to expand (and in some cases even start) their online services and that is where SHOP comes into play.
The company helps businesses of all sizes set up their online shops for e-commerce sales.
The company also offers many additional services that help businesses manage their shipments, inventory, advertising and online payments.
In short, many businesses will rely on SHOP to help adapt to this new landscape due to the pandemic.
Enterprises are undergoing a "digital transformation" and SHOP is a key enabler for them!
SHOP has had an extraordinary run that sets the stock price at a high valuation.
SHOP also faces stiff competition from heavy weights like Amazon, Walmart and Ebay
However, we believe SHOP is uniquely positioned to continue growing over the next 5 years.
We maintain HOLD on SHOP and will be on the lookout to open another position if we see a sharp pullback.