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Bert Hochfeld, Contributor
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Author’s reply » Yes. Sold last Wednesday at $93. Maybe a mistake, and I was conflicted. And it is higher now than it was when I sold it. But to me, the last several points look like a short squeeze not reflecting any evaluation of current business. I am a long term investor-except sometimes when I see spikes, i go to the sidelines. I have the same convictions/opinions I have held consistently but the share price has gotten beyond what I can analytically support. I wish it weren’t that way, although for me it has more than doubled. Not too many of those around that I have owned.
Just so you know-I have sold Amazon two or three times during its run. I often trade around positions personally-I do not try to tell others how they should trade especially if there are specific tax consequences.
16 May 2017, 09:05 AM …
Source? Link? Otherwise hearsay (or worse).
https://seekingalpha.com/article/4069084-shopify-investors-k…
Down in the comments section.
but the share price has gotten beyond what I can analytically support.
Darn, I could say that about almost every single stock I own. Fortunately, I’m too tired to replace 80% of my ports.
< sigh >
Dan
First, we can all agree that Shopify is expensive, and we’ve discussed a lot of reasons why it deserves a high valuation and that the inclusion in the S&P/TSX Composite Index may help.
Here are some data to as a counter balance and possible reasons why the price may go down quite a lot in the short run:
Month EPS AEPS TTMAEPS Hi Lo Close P/E P/E Hi P/E Lo P/S/S
Mar-15 -0.12 -0.06
Jun-15 -0.06 -0.03 $42.13 $24.11 $33.95
Sep-15 -0.06 -0.03 $41.11 $22.70 $35.20
Dec-15 -0.08 -0.01 -0.13 $39.29 $24.06 $25.80 9.8
Mar-16 -0.11 -0.06 -0.13 $28.78 $18.48 $28.21 -217.0 -221.4 -142.2 9.4
Jun-16 -0.10 -0.04 -0.14 $32.39 $24.96 $30.76 -219.7 -231.4 -178.3 8.9
Sep-16 -0.11 -0.02 -0.13 $45.20 $30.00 $42.92 -330.2 -347.7 -230.8 11.1
Dec-16 -0.10 0.00 -0.12 $45.45 $37.74 $42.87 -357.3 -378.8 -314.5 9.8
Mar-17 -0.15 -0.04 -0.10 $73.00 $42.14 $68.09 -680.9 -730.0 -421.4 13.8
======================================================================================
Jun-17 NA NA -0.10 NA NA $85.30 -853.0 NA NA 16.0
The price per sales per share is at its highest level (*using TTM Sales on Q2 estimates).
Here are Revenue & Gross Profit figures (no value showing NI figures):
Rev Mar Jun Sep Dec GrPr Mar Jun Sep Dec
2015 37.3 44.9 52.8 70.2 2015 21.6 25.3 28.7 35.5
2016 72.7 86.6 99.6 130.4 2016 39.3 46.2 52.5 68.1
2017 127.4 131.3 150.9 197.6 2017 72.2
Grth Mar Jun Sep Dec GrPr% Mar Jun Sep Dec
2016 94.7% 92.9% 88.6% 85.8% 2016 54.0% 53.3% 52.7% 52.3%
2017 75.2% 2017 56.7%
Here are the data for Subscription Revenue:
Sub Mar Jun Sep Dec COGS Mar Jun Sep Dec SubGP Mar Jun Sep Dec
2015 22.4 25.5 29.6 34.6 2015 5.0 5.4 6.4 7.7 2015 17.3 20.0 23.1 26.9
2016 38.7 43.7 49.8 56.4 2016 8.2 9.1 10.6 12.0 2016 30.5 34.6 39.3 44.4
2017 62.1 2017 12.3 2017 49.8
Grth Mar Jun Sep Dec COGS% Mar Jun Sep Dec GP% Mar Jun Sep Dec
2015 2015 22.5% 21.3% 21.7% 22.1% 2015 77.5% 78.7% 78.3% 77.9%
2016 73.2% 71.5% 68.6% 62.9% 2016 21.3% 20.8% 21.2% 21.2% 2016 78.7% 79.2% 78.8% 78.8%
2017 60.4% 2017 19.7% 2017 80.3%
Now the Merchandising Revenue:
Mer Mar Jun Sep Dec COGS Mar Jun Sep Dec MerGP Mar Jun Sep Dec
2015 15.0 19.5 23.2 35.7 2015 10.7 14.3 17.6 26.0 2015 4.2 5.2 5.6 9.6
2016 34.0 43.0 49.7 74.0 2016 25.2 31.4 36.6 50.7 2016 8.8 11.6 13.2 23.3
2017 65.3 2017 42.9 2017 22.4
Grth Mar Jun Sep Dec COGS% Mar Jun Sep Dec GP% Mar Jun Sep Dec
2015 2015 71.7% 73.2% 75.9% 73.0% 2015 28.3% 26.8% 24.1% 27.0%
2016 126.8% 120.7% 114.2% 107.5% 2016 74.1% 73.0% 73.5% 68.5% 2016 25.9% 27.0% 26.5% 31.5%
2017 92.0% 2017 65.7% 2017 34.3%
Here are the relative contributions to Sales:
Sub% Mar Jun Sep Dec Mer% Mar Jun Sep Dec
2015 59.8% 56.7% 56.0% 49.3% 2015 40.2% 43.3% 44.0% 50.8%
2016 53.2% 50.4% 50.1% 43.2% 2016 46.8% 49.6% 49.9% 56.8%
2017 48.7% 2017 51.3%
The price per sales per share is at about 16, it’s highest level since going public. The historical range is pretty wide.
Subscription Revenue, which has significantly higher margins, is becoming a smaller piece of the sales and margin pie. I’m not sure if this dynamic has been discussed much in the financial news. Will margin compression cause a hit in the stock price?
The inclusion of SHOP into the S&P/TSX Composite Index may help some. But it’s been covered a lot in the news and may already be priced into the valuation.
The valuation is very high (although I bought a small amount more at $85). The price could easily drop another 20% or more.
I am very happy to have purchased most of my shares in the $40s when it was already expensive. But given the runway for growth, I’m expecting today’s price to be good in the long run.
If the market freaks out, maybe I’ll be able to get (a lot) more shares in the $60s.
DJ
Hi DJ,
I really get a lot of value from your posts. Very concise with a lot of good information.
Thank you,
Andy