Trying to figure out the probability of a double in Shop in 3 years.
Current revenue of $673 M.
IF they average 45% rev. growth over the next 3 years, 2020 revenue would be about $2 B.
Current market cap of about $12 B, gives a 2020 price/sales of 6.
A 2020 p/s of 12 seems reasonable for a double. The odds are even better if they start to show cash flow acceleration.
What does everyone think of a 45% revenue growth rate/yr over the next 3 years? to optimistic?
Thanks,
Jim
45% averaged over 3 years could turn out to be overly optimistic, but maybe not.
Accounting for dilution is something else to keep in mind when looking at Shopify. 3 years out, there may be 30+% more shares outstanding, so that should be considered as well for trying to determine what the share price might do.
What does everyone think of a 45% revenue growth rate/yr over the next 3 years? to optimistic?
I think that a 60% revenue growth rate is more likely than a 45% revenue growth rate for the next 2 years. Maybe 45%in the third year.
I think a multiple of 9x (EV/sales) is more reasonable than a 12 multiple.
Just my opinion…
Chris