R u guys concerned w the shop valuation here? And how long do u think shop can maintain current growth rates at 75+%?
And how long do u think shop can maintain current growth rates at 75+%?
You are right, Rizzz, their growth rates may accelerate… It may turn out to be difficult for them to to keep them that low.
Saul
22 Likes
There is no numbers behind this, but doesn’t it feel like that being in charge of a network of 500,000 (and rapidly growing - and perhaps accelerating in growth as Saul aptly indicates may be the case) is worth at least $9 billion in enterprise value. Of course the same question came up when SHOP was valued at $3 billion and $6 billion. So was Baidu at $3 billion and ISRG at $3.5 billion.
These and many other examples evidence that being “overvalued” is more often than not a siren call that something special is happening here. And the primary thing to look at in regard to such a company is its COMPETITIVE ADVANTAGE.
SHOP is becoming such a company and its competitive advantage appears to be accelerating the more time goes on as competitors are not able to provide an equivalent platform, and each quarter it seems that they fall further and further behind in the caliber of their offerings vs. SHOP, even as they do improve their own offerings.
That is my feelings in regard when you take the numbers and put qualitative elements to them.
But perhaps it is time to short SHOP? Anyone? That has worked so well for Tesla, for Nvidia, for ISRG.
But things will change at some point.
Tinker
7 Likes
True Tinker but with the more general caveat that everything is overvalued; the siren call that something else special has indeed been happening since '07-'09!
I sometimes look at my portfolio holdings, stalwarts to high risk, and imagine their valuation ratios, ballooned in that period by QE and interest rates, being exactly halved and life going on. I find this too easily and readily imagined for comfort.
It is true that modern growth companies are a completely new and astonishing phenomenon in terms of rapid scaling. It is the relative valuation problem even after reversion to something higher than the mean which should be understood.
2 Likes
Oddly, among the few companies to which that feeling of over-valuation does not apply are AAPL, FB and GOOGL, all of which despite the recent hoopla seem rather cheap!