Throughout the pandemic lockdown, many stocks have seen their share price tank, and then maybe make a slight recovery in the last couple days. Tech companies, the Tesla's, Apple's and Amazon's of the stock market, have actually seen their share price rebound relatively quickly and even surpass their previous highs. One company that we'll be exploring today that hasn't exactly been in the limelight lately is Shopify, which went from $338.83 on March 18 to now trading at $689.07 the afternoon on May 5, a 103% jump in less than two months.
Shopify is definitely a unique company. They don't actually own a physical warehouse, but it does have headquarters in Ottawa. In fact, according to the company's own annual reports, they are "providing trusted tools to start, grow market, and manage a retail business of any size." Essentially, the company provides a platform for other retailers to expand their online reach and grow its e-commerce brand.
According to the 2019 annual report, the company has been able to retain its client subscriptions as each proceeding years revenue comes from subscription payments from previous years retailers and from recent subscribers.
From 2018 to 2019, Shopify has been able to increase service revenues 47%, $61 million more net cash flow from operations, along with $239 million more cash and equivalents. Along with this, the company has increased spending on marketing and R & D, with operating expenses increasing $49 million, or 54% from 2018.
The data shows that Shopify is a growing business, and is actively advertising its services to expand company reach. Shopify is currently Canada's second most valuable company based on market capitalization, with a value of around $80.87 billion USD, or around $113 billion CAD. They're right behind RBC, who has a market cap of $86.65 billion USD, or $121 billion CAD.
With Canadian businesses being restricted during this time, many have turned to e-commerce and online merchandising in order to continue making sales. Certainly, consumers are now finding it not only more convenient but safer to buy that shirt they've always wanted from the convenience of their own home rather than go out.
in a very short amount of time, Shopify share price has increased rapidly, and investors are wondering whether It’ll continue climbing the ladder. If you look at the company’s finances and rapid growth of the market it’s in, then yes it has some serious potential to keep going. However, the company has recently launched its “Shopify Capital” financing program which is looking to offer merchants cash advances ranging anywhere from $200 - $500,000. This in itself presents a problem for the company for the near future, as they can only wonder if lenders will actually be able to pay the money back.
I’m sure investors will keep tabs on this rapidly growing share and see just how high it can really get. As of market close May 5, Shopify is up 4.13% and is trading at $686.11
Any thoughts? Feel free to comment below