Shopify is issuing 2.6m shares at $154/share which would net them $400.4m. Remember, of course, that though because of the dilution each share represents a slightly smaller portion of the company, the company should be worth more because they will have an extra $400m. In the end it comes down to how well they use the $.
Color me skeptical on that. SHOP seems a bit rudderless lately. They’ve been growing much slower each Q, and admitting that it will continue to slow, but they don’t seem interested in cranking out profit. In fact, the last two quarters their Operating Expenses grew at a faster pace than Revenue!
I still have a vestige of my SHOP position which for a long time was my largest. But I’m not a fan of the recent trends.
and you can really see something materially impactful in a few months? it was just great back in the summer until…the stock threaded waters. But surely you reserve the right to ‘change your mind’ in future.
The optimistic view of the share offering is, “Because they could…”
SHOP is going to be tied to the general economy more than likely. If a recession happens, having cash is a great thing. Get while the gettins good…
As far as reasons to own the company amidst declining revenue growth and questionable approach to profitability, I would point to a few things. First, e-commerce. It’s growing quite rapidly and likely not going to end. More importantly I think, there is optionality within their services. Much like Square, they have room to expand services to existing clients raising ARPU.
Anecdotally, SHOP is great with customer service and they are also likely spending there. Another company I know of is obsessed with customers…AMZN.
Finally, SHOP may not be accelerating growth like some others, but the valuation seems to reflect that currently. The market seems to have the price right, but there is room for growth if they execute.
USE OF PROCEEDS
The net proceeds from the sale of the Offered Shares to be received by us are estimated to be approximately $395,200,000 after deducting the Underwriters’ discounts and commissions of $5,200,000 but before deducting expenses of the Offering.
We currently expect to use the net proceeds from this Offering to further strengthen our balance sheet, providing us flexibility to fund our growth strategies that may include: investing in the continued growth of our merchant solutions and subscription solutions offerings; future acquisitions; increasing our investment in sales and marketing, research and development and general and administrative functions; and continuing to invest in our network infrastructure. Pending their use, we intend to invest the net proceeds from this Offering in short-term, investment grade, interest bearing instruments or hold them as cash.
While we currently anticipate that we will use the net proceeds from the Offering as outlined above, the actual use of the net proceeds may vary depending upon numerous factors, including but not limited to our operating costs and capital expenditure requirements, our strategy relative to the market and other conditions in effect at the time. See “Risk Factors”.