SHOP Raising Money and Looking Attractive

The theory is Shopify’s share price has been falling because they are offering up some new shares at what was a slight discount and diluting shareholders to raise money to buy bad things. This actually looks like an interesting place to buy more shares to me though. What do you think? …


On Dilution
Shopify is creating a new 1.1-1.2 million shares to sell and raise more cash. This has almost no effect on us since it, according to this article, dilutes the share pool by less than 1%…our shares are worth a tiny bit less because we own a tiny bit less of the overall company, BUT we are talking an amount that is so small that daily price gyrations eclipse the amount. They are using their deservedly but still arguably rich valuation to raise money to reinvest and grow more. Sounds great to me!

On the Sale Price
So their price has been moving around in the $1k/share area (ATH was $1,138 on Sept 1st) and they offered the new shares to someone at around $900. They have been trading above $900 since end of June. Now the share price is below that at around $850. So the theory is people didn’t like the decision or are worried Shopify will buy things that make them worse…boo hoo!

Why I Like This
Shopify is raising almost $1 billion dollars with almost no effect to me. I assume they are getting ready to aquire company(s). I trust Shopify here to make good purchases. Their ability to expand their platform from just a website-builder to a total business platform is why I value them so highly. Their last big acquisition bought them warehouse automation and management technology (…). They are just expanding their moat so much by constantly adding value for customers. Shopify always chooses to make money when their customers do so you can be sure any acquisition adds value for customers and perhaps more ways for them to make money in a win-win way.

So Shopify is the same great company at a ~25% discount to their all time high. I won’t get in to a valuation discussion but no matter how you look at it they are more valuable today than they were before. I mean, it is like hoping in a time machine to go back in time to mid-June, before the last earnings release, to buy shares at those prices, but knowing what we know today. Sounds nice.

I can’t wait to see what Shopify buys!