Reminder: $SHOP split 10 for 1 on 29 JUN 22.
I’ve been slowly building into this one at prices I never dreamed I would be see again. I wonder if anyone on the Saul Board has mentioned this one recently?
Daily chart shows last week’s breakout on Wednesday picking up steam (volume) by end of week.
Weekly chart
Monthly chart
A re-do of the monthly chart with a loooong down trendline which $SHOP broke out from back in August. Also, I changed that RSI study from 2,1 to my newly favored 5,1 study for monthly charts:
People bought Shopify as a Covid stock. People at home and afraid to shop in stores was a driver for growth. Now we see expectations of slower growth due to end of Covid.
Longer term, on line sales are likely to continue to increase but at a slower rate.
Patient investors could find it a good time to accumulate shares.
Longer term, on line sales are likely to continue to increase but at a slower rate.
Patient investors could find it a good time to accumulate shares. – PT
I recently sold our very successful position in AMZN… and plan to sell our MELI… and am building a SMALL position in GLBE, while avoiding SHOP (which owns a good size chunk of GLBE).
My rationale is that even AMZN struggles to make any money with their gigantic online sales and delivery system and MAYBE such a business is just fundamentally low margin.
So…that leaves the following reasons to like or dislike these companies… sometimes liking because there is MORE TO THEM:
AMZN: Gushing cash due to AWS. Only. Might be worthwhile to own only on that basis. Did fine with it, more than a 10 bagger.
SHOP: Pretty much just the online sales and delivery facilitation.
GLBE: A special case. Very small, facilitating cross border transactions. May be worth only in the early stages.
CPNG: A Korean version of SHOP/AMZN in terms of sales and delivery.
MELI: Similar to CPNG, except with the addition of rapidly growing fintech. Has generated hyper growth for many years with spotty profitability… yet with great stock results.
SE: Online gaming, online sales/delivery plus fintech. Gaming is now sagging, fintech is booming and the sales/delivery remains a question mark.
We currently own some MELI and GLBE and are out of SE and AMZN and SHOP. I might be talking myself out of owning them here. Not necessarily because they are bad investments currently, but they are saddled with fundamental BURDENS relating to the generation of strong cash flow.
Hmmmm… I’ll give it more consideration. I have to sell the MELI position soon (a Jan23 call position currently underwater) and my GLBE position is small. Maybe it makes sense to shift to some “sprinters” instead of companies with a ball and chain… duh…
Rob
Former RB and BL Home Fool, Supernova Portfolio Contributor & Maintenance Fool
He is no fool who gives what he cannot keep to gain what he cannot lose.
“The whole secret of investment is to find places where it’s safe and wise to non-diversify. It’s just that simple. Diversification is for the know-nothing investor; it’s not for the professional.” Charlie Munger
Yes, retail is a low margin business. Fortunately Amazon has AWS to give it some profits.
Also Jeff Bezos realized early on that in online sales, market share is everything.
A customer can just as easily buy from any of your competitors (unlike storefront retail where location is important).
If people think of your shop first, that is a major advantage. And low cost real estate works fine.
Shopify seems to be good at helping smaller firms get on line and start selling. They must have many potential customers. If they have an efficient, cost effective system, the future should be bright.