SHOP rising price targets

Investment Analysis Clubs Saul’s Investing Discussions
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Thanks to MikeStrain on the SHOP board for posting the following link which I repost here:

https://www.cnbc.com/2019/06/24/analysts-say-this-stock-is-g…

Yes, we’ve discussed the slowing growth at Shopify at length here, but these analyst comments and price target raises really make me happy I never sold:

Barclay’s: PT to $310 from $225

…Similar to how AMZN built its fulfillment center network over the years to support Amazon Prime two-day (and now one-day) shipping, we also expect Shopify Fulfillment Network to grow and improve the value proposition for merchants significantly.

Goldman Sachs: (No PT, Neutral rating)

At scale, SHOP expects fulfillment will allow merchants to deliver to 99% of the continental USA within two days or less, making it more competitive with Amazon.

Rosenblatt: PT to $395 from $295

…Consumer packaged goods remains big unpenetrated opportunity. Shopify Plus head Loren Padelford confirmed our earlier notion that Shopify is quietly emerging as “the” DTC platform for CPG.

Canaccord: PT to $360 from $270

general retail scale will enable the firm to pull away at an exponential pace.

Baird: PT to $360 from $269

new fulfillment services should reduce churn and customer acquisition costs as Shopify looks to provide merchants with a viable alternative to Amazon.

Summit Insights: (Buy rating)

This is big: AMZN alternative.

Best to you all!

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Thanks MrSlideShow…

Here’s another article posted by Starrob on the Shopify board:-
https://investorplace.com/2019/06/why-shopify-stock-300-make…

I happen to agree with 1) Shopify’s potential coming from the tailwinds of eCommerce and 2) The value creation opportunity arising from combining a 1 stop shop of eCommerce/social commerce & mobile commerce platform together with a B2B commerce support ecosystem platform together with payments together with logistics fulfilment and 3) The opportunity arising from DTC which is massively growing phenomenon.

I don’t think the outlined scenario is unreasonable for Shopify:
Shopify’s take rate of GMV normally hovers around 1.5%, so that equates to merchant revenue well north of $10 billion. Assuming the subscription business grows somewhat in line with the merchant business, sub revenues could easily get to $4-$5 billion by 2030. Thus, Shopify’s revenues could easily get to $15 billion-plus by 2030.

If Shopify is at a P/S of 10 then Shopify can 4x from here by then and at a P/S of 20 then it could 8x.

I get that this is starting to analyse Shopify in terms of its “story” rather than its current numbers which is not what the Saul method is about.

I also take on board that growth rates have fallen considerably however that’s backward looking comparing Shopify now vs historic Shopify growth in 2017/2018 and not vs other investible companies - where I fail to see many companies with organic growth rates at Shopify’s level and NONE at the $1bn+ run rate adding the total new $s and at the rate that Shopify is adding every quarter/year.

I also get that the valuation now is stretched and that it is not demonstrating the cash flow/bottom line leverage we would like to see. However to be fair its P/E at 560 is far less than TTD’s for example at 750 (with 25% more revenues and 100x the TAM) and where at least the P/E exists vs many other younger loss making cloud start ups.

A

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3) The opportunity arising from DTC which is massively growing phenomenon.

Just thinking back to one of the criticisms that Saul has made of Shopify is that CTOs and corporate boards members are not likely to be considering Shopify for corporate websites if they are seeing start up entrepreneurs being the target market focus for Shopify.

Leaving aside the difference between Shopify and Shopify plus which is effectively the “pro” version. I think there is a significant variance between say Walmart, Bloomingdales, Macey’s, Safeway etc or even a GE or Microsoft using Shopify for their corporate website, versus the marketing brand team of Levi Jeans 501 or Nike Jordan Air selecting Shopify for their DTC marketing & ecommerce platform to drive their mobile/social and eCommerce sales to end consumers direct and tie the entire brand marketing and selling together with integrated campaigning and transactions which is what the DTC model is all about.

Sure we have talked about and identified examples of Shopify eCommerce sites for restaurants, restaurant chains and even off license chains promoting and transacting the full product range but the corporate angle is less about the group corporate website more the marketing DTC level opportunity to me.

In addition Shopify now represents a full service integrated ecommerce stack as an alternative to Amazon for anyone who does not want to feed the competition/frenemy.

A

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From the Monday Morning Rules of the Board

No market predictions of Investor Business Daily or anyone else

This thread is off-topic.

🆁🅶🅱
wordlessly watching, he waits by the window and wonders…

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From the Monday Morning Rules of the Board

No market predictions of Investor Business Daily or anyone else

This thread is off-topic.

I’m not sure if this post is sarcastic or not.

But the discussion above is relevant to any of us holding SHOP and considering the implications of its new announcement as an investment moving forward

I, for one, appreciate the deep dive and sharing of knowledge.

Respectfully,
Just a Fool

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I’m a little confused how this thread could in any way be considered off topic.

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No market predictions of Investor Business Daily or anyone else

This thread is off-topic.

Bzzzt.

Talking about SHOP specifically (high growth stock some of us still own and follow, and that Saul owned for well > a year) is NOT what that rule is about.

These posts were not “market predictions” (about THE MARKET as a whole - economic forecasts, overall sentiment, etc) in any way. Taking note of analyst views is not at all the same thing and it is something Saul has done at times to judge the overall Wall St mood of the stock.

I appreciate the focus and rules here as much as all but no need to be so overzealous that it stifles the discussion of a hyper-growth stock that this board focuses on.

-muji

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This thread is not off-topic.

Someone shared a few price targets (which Saul does occasionally) and others began a meaningful discussion about the investment thesis around a growth stock.

Please refrain from any more debate on whether it is on or off topic and resume the awesome discussion on growth stocks.

Thanks all

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