Here’s hoping the best for all SHOP shareholders tomorrow.


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I hope that too. Despite what I wrote earlier, I don’t expect it to fail or perform badly this very quarter, just that its price does not reflect the risk…

EPS at breakeven is a 0.02bat and revenue up 86% Y/Y.
+2.5% pre market at the moment

I sold a third last night fearing a miss, maybe I was wrong … oh well

2 days ago 2/13/2017 2 brokerage house raised their targets on SHOP (Monness and Crespi and RBC) based on channel checks. Doing this ahead of earnings is putting their necks on the line. Guess they were right.


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My reactions:

  • Beat & Guidance raise on the top line looks great

  • I wonder when / if the market will ever demand they start showing a profit? Or if they’ll ever not be able to spend enough money to show a loss? Maybe they really are the new Amazon.

  • Man, PS is still over 13. But when rev is 125+ next quarter that would drop it to ~11.5. It’s really hard to keep up with this company. If you believe they will have ~3x as much revenue maybe 2 years from now…which would be more than a billion dollar run rate and might still only be the beginning…what does it look like in 10 years? And how do you begin to value that today?

  • GMV is tearing it up…I think that will continue, though we have to remember this was a Dec quarter. Is 63% sub growth sustainable for a while or will we see 50% or so in 2017?

  • I actually think the market is getting this right. A fairly mild reaction to a stock that beat solidly…but was priced as if it would beat solidly.

  • This is a company I want to own for a long time.



The reaction to earnings was not quite “fairly mild” as the stock rose substantially into earnings. More often than not when you see a stock rise like this into earnings, it will decline no matter how good the earnings were. So pretty dang good market reaction, for whatever that is worth.

Also, the price to sales is less than 10, if you believe forward looking projections. $600 million in 2017 revenues, and will probably beat that. Marketcap of $5.3 billion less cash. Assuming SHOP ever turns profitable, and maintains a 15% profit margin that would put it at hypothetically around 50 forward P/E. Not cheap by any means, but actually not bad for a company growing this fast. I use this for no other purpose than to put in context if the company is growing into its valuation or not, and what the price to sales actually means, as at some point these revenues will turn into profit (as is the market perception and expectation) and you can see that Sales is not at a bubble valuation.

Sure, if business were to slow down substantially, we’d fall off a cliff, but that is true with any high growth company that is valued with the same going forward.



Share count is growing like a demon, which makes the loss per share look better,
but raises the sales per share ratio.

Q4 2016 vs 2015
89,137,155 ~~ 77,996,629

Nearly a $6 Billion market cap @ $60