Interesting aspect of SHOP Share availability

This article mentions that Shopify may soon be added to the S&P/TSX Composite Index, which would effectively reduce the supply of shares being actively traded due to SHOP being added by a number of index funds. I hadn’t yet seen a discussion of this type of phenomenon, as I don’t recall closely following a stock that has “graduated” to joining an index.

https://seekingalpha.com/article/4075782-shopify-supply-shar…

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I’ve been here a few times. I was wondering when someone would bring this up in regards to SHOP. They’re reaching that size where not only do brokers’ clients all want a piece, but their firms need some for their funds and in-house ports to keep pace with the market. And now come the indices.

There are a lot of reasons for a company to issue equity shares, and they aren’t all negative. Whatever management’s plans are for the new capital, they have proven to me that they’re more than smart enough not to spend it all on Maseratis, women and booze. Maybe, just maybe they were asked to issue shares by market “forces.” Great observation, volfan. I could be wrong, we could both be wrong. But I suspect not, at least not entirely.

As to the other possible reasons for discussed for re-issuing shares … is it over-priced? Heck yes, are you crazy? :slight_smile: They’ll have to mint gold to grow into their price logically any time soon. But here’s the thing. For every investor who claims to have got in on the ground floor of NFLX, AMZN, SHOP or any other rocket, most are exaggerating. Regardless, that leaves millions who missed out on most or all of those gains. The word is out: SHOP’s reputation is growing and many think they are the NBT. So no one wants to miss out on another launch.

Regarding the “Scamify” thing, while I do think the price has passed its “logical” price by a bit, I can not see why that would make other investors think that Shopify won’t be around for a good several decades ahead and kicking butt all the way there. This situation is often the price of getting in “on the ground floor” of an innovative company. You have to pay up before they’ve minted gold. That’s a reason why we all miss so many. After the fact, they all seem so obvious. They were right there in front of us the whole time. But you have to study all information available. You have to be as SURE as you can be. You have to BELIEVE. SHOP’s plan is visible from miles away. Now there are too many believers? Ha! Scamify that.

Lastly, that cash … You’d think it’s going up in smoke somehow to hear people guess about their reasoning for the share issue, like it will disappear tomorrow, < POOF! > Meanwhile, who owns it? That’s right, we do. Who’s balance sheet will it flow to? That’s right, ours.

So now there aren’t enough shares to go around? That’s too bad. I admit it, I might have accidentally grabbed some of their shares too. Call me greedy.

Alas, no. They aren’t for sale. :slight_smile:

Dan

go SHOP

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There are a lot of reasons for a company to issue equity shares…

My cousin – nosegrowin – had this to say:

“Schemify has promised to be profitable by Q4. They deposit this cash while the stock is smokin,
they earn 1/2 percent on the short-term paper, which after dilution will translate into about .02
to .03 per share in income. Add that to the IOU (aka adjusted) operating earnings, and voila!”

You have to BELIEVE.

Yup, that’s how the market and the casino work their magic.

Ears

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Yup, that’s how the market and the casino work their magic

Why companies come public? Because that allows them the ability to raise money by issuing shares. If there are folks who want to buy high priced shares and the company wants to take advantage of it, by all means, they should do it. That’s the normal behavior of markets. I understand you have a valuation case, that is fine but I think casino comparison is a bit of a stretch.

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To complete the “scam,” they could, instead of holding the cash as cash, use it to temporarily buy shares of a rocketing stock like - SHOP!

I suppose that’s not legal, but it would complete the circle and grow the earnings more.

Here is a follow-up. Sounds like an official announcement may come next Friday, with a fairly big demand for shares to get the index funds properly allocated.

https://seekingalpha.com/article/4078089-shopify-supply-shar…

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I almost have to think that some of today’s big bump (~4.5% as of 2:40 on Friday 6/2/2017) is due to this phenomenon…which makes me feel a little like I missed a great short-term opportunity of call buying.

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I almost have to think that some of today’s big bump (~4.5% as of 2:40 on Friday 6/2/2017) is due to this phenomenon…which makes me feel a little like I missed a great short-term opportunity of call buying.

I couldn’t help myself, so I entered the following position.

SHOP JUN 16 2017 110.00 C bought at $0.55

Surely Shopify is immensely overvalued and my calls will expire worthless…but who knows. It seems that the “big dumb money” that is the billions of dollars going to index funds will be buying SHOP over the next several weeks.