I’ve been an investor since 2000. Instead of having 20 years of experience I feel I have 1 year of experience repeated 17 times and just learned anything in the last 3. I discovered this board last month and it has opened my eyes and up at night catching up. Amazing amount of information. Thank you
It seems that nobody owns Shopify and I’m wondering why. It has increased 250% this year. Am I missing something. Hope this is not OT.
Howie
Long shop.
At the risk of responding to an Off Topic post (I’ve had my hand politely slapped several times and I get it - we must follow the Rules of the Board)…
There are some on this board that remain long SHOP, and for good reason, as you point out. However, some reduced their position in Shopify, some as far back as 2018 (August) when SHOP’s rate of revenue growth, which had been falling every quarter, fell precipitously in a quarter when the economy was very strong, and a quarter in which SHOP’s competition (e.g.Square), did materially better, garnering huge results following accelerating rates of growth in each of the quarters in which Shopify had falling rates of growth, suggesting SHOP was losing market share in a growing market.
In addition to SHOP’s revenue taking a hit from Q4’18-Q1’19, it took another dip again from Q4’19 to Q1’20. But, the market apparently digested it and, as you suggest, SHOP is up considerably over the last year, 6 months, 3 months, 1 month, 1 week, and today (up ~4.6% as of 12:10 ET, 7/1/2020, which is a good appreciation for 3 months most years).
That said, this board is ruthless in their pursuit of high revenue growth companies, that also have high recurring revenue, high gross margins (>50%), competitive advantage, and improving financial metrics, among other criteria. Some on this board do not tolerate even modest revenue growth, even suggesting selling companies that are growing less than 10% per year.
Hey Howie !
It seems that nobody owns Shopify and I’m wondering why.
I own SHOP and it’s up over 900% for me.
Sit back - relax - have fun
Rich (haywool)
I own SHOP, too (up 2,400% since I bought it! That is not a typo). People post about it occasionally here when there is news that either 1) affirms a continued long position or 2) provides reasons to sell. One thing I’ve learned on this board is to continuously evaluate holdings and not get complacent; I have trimmed many stocks but SHOP is a keeper for me. If you haven’t already come across it, here’s a search tool to help you find posts about SHOP (and anything else) on this board: http://www.datahelper.com/mi/search.phtml
Just be sure to select this particular board from the drop down menu.
I consider Shopify a core holding. I have personal experience with the platform. I don’t think they have any real competition for their space (if you ignore self-hosted solutions or those which need a team of devs on staff). Their customer service is awesome. They support businesses in a genuine way. The pandemic is the perfect time for a company like this, with their culture, to exist.
Their platform is getting easier and easier to use and more feature rich. I could spin up a complete shop in a couple days, including social media sales channels and such, and this is not even remotely my day-job (I’m not a professional).
Then there is Shopify+ which is getting some big customers to compliment the smaller shops. The integration options, workflow automation and support are so attractive.
The other benefit to being a large platform is that if you do need a dev there are a lot out there who know it well. There are even companies where you can post a feature you want and get a quote, then use the Shopify external access features (very simple to use) to let them in to develop the feature for you in a trusted way.
Not only that but they disrupt Amazon! There is a whole segment of “sellers” that rely on amazon completely and this is a huge risk for them. Amazon has been known to simply cut off a seller with no explanation and no way back. As Shopify becomes easier and integrates with more sales channels (the new Facebook Shops and Walmart most recently, for example*), more and more will move over to the safety and peace of mind of being in control of their own shops (and in many cases probably not give up the Amazon business to do so, but still do it to diversify their sales channels).
I only recently started building a position. SHOP is now 7.8% of my portfolio:
Buy Date Gain
2019-04-09 +137.73%
2020-04-22 +62.00%
2020-05-07 +37.90%
2020-06-16 +26.31%
2020-06-26 +11.15%
There may come a time in the future where I could see reducing my position, but for now, at a time like this, I am a very happy shareholder.
*References
Walmart news: https://techcrunch.com/2020/06/15/walmart-partners-with-shop…
Facebook news: https://betakit.com/shopify-partners-with-facebook-to-launch…
That said, this board is ruthless in their pursuit of high revenue growth companies, that also have high recurring revenue, high gross margins (>50%), competitive advantage, and improving financial metrics, among other criteria. Some on this board do not tolerate even modest revenue growth, even suggesting selling companies that are growing less than 10% per year.
I am not sure that I would categorize Shopify as off-topic for this Board, although Saul no longer owns or follows it. Shopify is a high-revenue growth stock, they grew revenue 34% in the last quarter. It looks like Shopify’s gross margins are greater than 50%.
Shopify might not be as high-interest to the board as some of the other well-followed companies here, but I doubt that it is off-topic. Perhaps a board moderator can chime in.
Karen
Thanks to all who responded to my post. You helped me “relax”. And feel comfortable with my position. It’s difficult to go from a diversified portfolio to an all in mentality but I see how well it works. By the way Happy Birthday Saul. I wish I found this board years ago.
Howie
On the other hand, this article (Barron’s via Josh Brown) points out that SHOP is probably the most expensive stock in the world. Worth a read, as it’s tripled just this year and has a market cap of $120 billion.
Shopify is on pace to finish 2020 with around $2 billion in revenues. It has a market capitalization that exceeds the combined valuation of Walgreens, Kroger and Target, according the article – companies that do a combined $350 billion in annual sales. LOL. <bIf you’re a buyer of the stock here, you either think there are millions of new investors coming in behind you who will pay any price to own the stock, or you’re bullish about the ecommerce opportunities post-colonization of Mars, Jupiter and Saturn.
Investors would do well to remind themselves that even if the bulls’ wildest predictions for Shopify’s growth come true, there’s no rule that says the share price must reward them from here. The starting price you pay for a stock, regardless of how much growth the underlying company delivers, can absolutely work against you if either market-wide multiples contract or single-stock fundamentals are already priced in.
https://thereformedbroker.com/2020/07/06/the-most-expensive-…
I saw that article, and the part you quoted, and it doesn’t add up to me:
Shopify is on pace to finish 2020 with around $2 billion in revenues. Walgreens, Kroger and Target, according the article – do a combined $350 billion in annual sales.
So when the author says:
…the ecommerce opportunities post-colonization of Mars, Jupiter and Saturn.
He’s limiting the growth of the e-commerce market, and I believe is doing so incorrectly.
If Shopify were to take just 5% away from Walgreen, Kroger, and Target (not to mention other brick and mortars), Shoify would have $19.5 Billion in revenues - almost 10X what they have today. And Amazon is another 10X that already.
No interplanetary travel required for Shopify to grow, even from here.
Not really a reasonable comparison.
Remember Walmart has 100% take rate on all private label sales, and a 30+% take rate on 3P sales in store. Walmart/Kroger/Target retail “GMV” if that even makes sense is <$1trn
Shopify has around a 2-3% take rate. To generate $20bln in sales it would need around $300-400bln in GMV assuming decent take rate uplift even above what they expect.
That’s much higher than 5%.
On top of that, Walmart private label for example is never going to be taken as share onto Shopify.
Shopify is valued as it is because people see it as an enabler of the DTC e-commerce channel. If it achieves a strong position there it can be a very large company. But that doesn’t mean taking share from Kroger/Walmart/Target. It more means taking a lot of small and medium merchants that would typically have been craft stores/small retail/not selling anything at all.
There is a lot of competition for larger merchants - CommerceCloud (Salesforce), Magento (Adobe) all of which have large market share in this area and Shopify is an inferior/even product. Shopify’s important focus is smaller merchants.