I don’t have a lot of data to fill out the story but I saw this quote in a press release and I can’t help but see a big correlation to all of the zoom quotes where they talk of huge user growth. This was a quote from a Shopify executive: Last week, a Shopify executive said on Twitter that it was “now handling Black Friday level traffic every day.”
Assuming this is true what kind of sales multiple is Shopify seeing? And what does it mean to the company. And these are not free subscribers like many of zooms. I can see why SHOP is seeing the rapid price appreciation, I am wondering how much more it should be seeing, notwithstanding today’s retracement, the stock has been on fire.
I have always liked it as an alternative to Amazon and I think the current situation is causing an acceleration away from retail and towards internet purchases.
Does anyone else still own SHOP here? What are your thoughts?
Does anyone else still own SHOP here? What are your thoughts?
I do! Through benign neglect more than anything else SHOP has become my largest position at 14.79%. (+465% gains)
I think the company has a pretty long runway. The majority of sales at Amazon are made by third party sellers. Plus Amazon takes a significant percentage of those sales. Shopify is known to be much more seller-centric. I think if they can nail down the fulfillment and payment aspects of their business, many Amazon vendors would be happy to switch platforms.
I suppose there could be a question of what “traffic” means. If it is millions of people searching for sources of toilet paper, of which no one has any, then it is a lot of traffic, but no commerce.
I still own some SHOP from $38. Everytime I sold has proven to be a mistake. My take on SHOP is that it’s the anti-AMZN. When a 3rd party vendor sells on AMZN’s platform, AMZN knows the data. It is well known that items that sell well are subject to AMZN outsourcing and undercutting the very vendors they serve. The last time I saw an estimate was that about 20%+ of AMZN’s sales come from item’s they’ve knocked off and sold under their brand. I’m sure it’s higher now. With SHOP there is no such conflict. The data is owned by the vendor who can them optimize/monetize that data for their own benefit. SHOP uses their platform to aggregate services to give economies of scale that would not otherwise be beyond the reach of SMBs. SHOP was built for these times of online buying and fulfillment. Last quarter I believe their growth was about 47% off the top of my head. That’s pretty amazing given SHOP’s size. I assume given the C-19 pandemic, it’ll be higher this Q. Unfortunately given the economic shut down many brick and mortar retailers will not survive. They will be replaced by more online shops imo.
Agree Moneyman’s reasons for liking Shop. that said, yesterday sold 3/4 of my shares held since 2016 during which it had gone up 17 times and I think about 3 times in the last year, so getting too heavy and wanted to move the money into some of the great other ideas on this discussion board. I expect my 25% will continue to prosper, and the 75% will keep working elsewhere.
I sold SHOP around this time last year… in $300s… purely on valuation… and obviously its been proven to be a mistake… but I am not so sure…
For each decision to sell over priced stock be proven to be a mistake, there have been many others that proved to be right. And so I am sticking with it!!
Having said that - I see SHOP has become a lot more story stock… on mini Amazon narrative…
There are two big dis-similarities that actually adds a lot more value to Amazon and SHOP is not a path to get that:
On the retail side of the business, Amazon brings customers to the door to their merchants, thats what gets them a big big share of that pie (somewhere between 15% to 20% by the end of the day)…
People go to Amazon to find and buy products… people dont go to Shopify website for the same purpose.
SHOP is backend support… that is generally a lower margin business and adding delivery network will further reduce its margins…
AWS has been bigger value add to Amazon than the retail business for last decade or so… AWS is cloud infrastructure, much higher gross margin.
SHOP is expanding into warehouse and supply chain, thats much lower margin business.
While I strongly believe SHOP will continue to grow its revenue at ~40% CAGR for couple of more years (may be even bigger growth this year). However, its value creation will be no where near Amazon on its current path. And therefore, the current valuation is beyond dangerous… the risk is much higher here for narrative to break, specially past the current shutdowns.
People go to Amazon to find and buy products… people dont go to Shopify website for the same purpose.
Appreciate your take! One of the things this may miss, however, is that people don’t need to go to a company’s Shopify-powered website to find or buy products. Through SHOP, any company can push sales out to Facebook Marketplace, Instagram, eBay, Google Shopping, and yes, even to Amazon. Plus other channels.
You nailed it MM3. I am one of the ecommerce’rs that sell on my Shopify store AND AZ.
But since anyone that buys my product on AZ, becomes THEIR customer (they wont share customer email/contact/etc), I only sell my stuff at inflated prices.
If they like my product (I have unique/trademarked designs), but dont like the price, they will do price comparison searches online, and end up at my Shopify store. Win/win for both of us.
BUT, I am long both AZ and SHOP in the investment world…
I’ve also sold in and out of Shopify when I would have had much bigger gains holding. Had a position that was accumulated at around two price points of $25 and $60 and then sold when it got to $160.
Another position I bought in around $130 and sold around $400.
Obviously would have done much better just holding throughout.
The current price does seem high to me, especially at 75 billion market cap.
Will be really interesting to see what they say in their earnings report. I’m surprised there was no public mention that they pulled guidance (crashing the stock), and then a few weeks later tweeted about Black Friday levels… seems like a manipulation of the price especially when knowing pulling guidance without saying it was for good reasons is almost always bad news.
What I am really wondering about is if Black Friday levels means double the bottom line as well?