|Bid||318.18 x 1800|
|Ask||318.94 x 800|
|Day's Range||315.87 - 324.80|
|52 Week Range||117.64 - 338.94|
|Beta (3Y Monthly)||1.36|
|PE Ratio (TTM)||N/A|
|Earnings Date||Apr 30, 2018 - May 4, 2018|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||320.84|
Shopify (NYSE:SHOP) stock is on fire year-to-date. Shares in the e-commerce platform zoomed 134% from January, with the stock currently trading around $322 per share. While the company's cloud-based SaaS solution for retailers is a game-changer, it is tough to justify a buy at the current valuation levels.Source: Shutterstock But with sales up 50% year-over-year, do the bulls have a point? Read on to see if Shopify stock is worth the sticker price. SHOP Continues to GrowShopify made its bones offering "back-end as a service" for scores of small e-commerce businesses. With that market locked up, SHOP stock needs new growth avenues to move the needle. With the company's move toward large enterprise customers, Shopify has found new ways to scale up the business into a global e-commerce powerhouse.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBased on Q1 2019 results, the growth story continues to play out. Total revenues were $320.5 million, up 50% year-over-year. Subscription revenues were up 40%, as merchants continue to sign up for the platform. The biggest growth was in Merchant Solutions, up 58% YOY. This growth was driven largely by increased merchandise volume among Shopify's third-party merchants.Shopify continues to develop its infrastructure, allowing them to become a global e-commerce powerhouse. The company's payments platform now enables merchants to accept sales in multiple currencies and get paid in their local currency; 40% of eligible merchants now use Shopify's shipping platform. The company's merchant cash advance unit grew 45% YOY.Shopify is to e-commerce what Salesforce is to CRM. The rise of e-commerce continues to be SHOP's strongest catalyst. But as SHOP scales up, will the company stumble along the way?With the Q2 earnings release anticipated to occur in August, within a few weeks, investors will have a clearer picture of Shopify's future growth. But for the time being, Shopify's recent fulfillment center announcement indicates their long-term strategic plans. * 7 Dependable Dividend Stocks to Buy With Fulfillment Center Expansion, Is Shopify the Next Amazon?Shopify surprised Wall Street with their announced plans to build their own fulfillment centers. The move created speculation that SHOP will go toe-to-toe with Amazon (NASDAQ:AMZN) for a bigger piece of the e-commerce pie.But can SHOP become the next AMZN? Building out their infrastructure makes Shopify a stronger partner for third-party retailers. But with the company barely generating $1 billion in sales, how do they expect to finance this massive build-out?Based on CFO Amy Shapero's presentation at Shopify's Investor Day, the company anticipates the fulfillment investment to be spread over the next five years. Shopify expects "incremental revenue to largely offset costs". The company anticipates positive returns on this investment to occur after 2023.The fulfillment build out is a long-term investment. Investors today pay a substantial premium for the expectations of Shopify's game-changing moves. But can this anticipated growth alone justify SHOP stock's current valuation? Valuation: How SHOP Stock Stacks Up to Its PeersWith SHOP continuing to post operating losses as it invests in growth, enterprise-value-to-sales is the best tool to compare SHOP stock's valuation to peers. Shopify currently trades at a EV/Sales ratio of 28.Here are the EV/Sales ratios of Shopify's main publicly traded peers:Amazon: 4.23PayPal Holdings (NASDAQ:PYPL): 8.5Square (NYSE:SQ): 9.4Twilio (NYSE:TWLO): 24.7The Trade Desk (NASDAQ:TTD): 21But given that Shopify is purely a SaaS platform, it is tough to compare valuation against its direct competitors. Amazon, being a full-fledged retailer as well as a marketplace, obviously trades at a lower EV/Sales valuation. PayPal is a fully scaled up operation, with slower growth but high operating margins.Twilio and The Trade Desk operate in different industries, but are similar to Shopify in that both are cloud services providers (cloud communications for Twilio, digital advertising for The Trade Desk).With Shopify stock trading at a premium to fellow B2B service providers TWLO and TTD, SHOP appears richly valued. While the company is making leaps and bounds dominating e-commerce, the stock is not a buy at these valuation levels. * 10 Stocks Driving the Market to All-Time Highs (And Why) Bottom Line: SHOP Stock Not A Buy TodayTen years down the line, Shopify could be a formidable competitor to Amazon. But at the current trading price, SHOP stock is too overvalued for investors to consider.While the company has seen significant growth in revenues, the company has yet to be profitable. While the announced fulfillment expansion is a positive catalyst for future growth, investors need tangible results before putting in a buy order.Short term, SHOP stock is a sell. A massive pullback could signal a buying opportunity to place a bet on SHOP's future prospects. But until then, investors should be cautious before chasing this growth story.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post Why Short-Term Investors Should Avoid Shopify Stock appeared first on InvestorPlace.
About a year ago, I coined the high-growth STARS acronym on InvestorPlace, saying that these five growth stocks -- Shopify (NYSE:SHOP), The Trade Desk (NASDAQ:TTD), Adobe (NASDAQ:ADBE), Roku (NASDAQ:ROKU), and Square (NYSE:SQ) -- are the high quality, big return potential stocks that investors want to buy now and hold for the next several years.The idea behind the STARS acronym was simple. The market's favorite high-growth acronym -- FANG, which comprises Facebook (NASDAQ:FB), Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) -- was becoming increasingly obsolete for investors. That's not to say that FANG companies have peaked. They haven't. They are still doing very well. But, they are such large companies and long FANG is such a crowded trade, that the long-term return potential in these names isn't what it used to be. It almost certainly isn't the best return potential investors can find in the overlap of growth and technology.STARS is exactly that. Each one of the STARS stocks is supported by huge secular growth trends, is small relative to their addressable markets, is unknown relative to the FANG stocks, and has huge upside potential in a multi-year window. That's why I told investors to forget FANG and buy the STARS stocks a year ago.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe results speak for themselves. Over the past year, the S&P 500 is up about 7.5%. Had you bought one share in each of the FANG stocks, you would be up just 5% over the past year. But, had you bought one share in each of the STARS stocks, you would be up more than 70% over the past year. Click to EnlargeIn other words, STARS stocks have generated more than 60 points of alpha over both the S&P 500 and FANG stocks over the past twelve months. * 7 Dependable Dividend Stocks to Buy This out-performance from the STARS group will continue. Without further ado, let's take a deep look at why you should buy each one of these high-quality growth stocks. STARS Stocks to Buy for the Long Run: Shopify (SHOP)Source: Shutterstock Trailing 12-Month (TTM) Gain: 90%The Bull Thesis Tag Line: "The Next Big Thing in Commerce"Core Bull Thesis: The secular bull thesis on e-commerce solutions provider Shopify is simple. Thanks to the widespread proliferation of the internet, the commerce world is two doing things: One, it's pivoting into direct retail, wherein brands and merchants are selling to and communicating with customers. Two, it's also pivoting into a decentralized model, wherein anyone can sell anything to anyone else.Shopify is at the heart of both these pivots, providing the tools which allow any seller to sell any item through any direct channel, and is thus levered to benefit from the expansion of these two huge secular tailwinds.These tailwinds are still in their early innings. Shopify's gross merchandise value represents less than 1.5% of global e-retail sales, and is growing at a steady 50%-plus pace. Further, Shopify just started to jump into the physical retail world, dramatically expanding this company's addressable market.As such, SHOP has the necessary room and firepower to keep growing at a robust rate for a lot longer.Key Growth Projections: * Shopify goes from 1.5% e-retail market penetration today, to 7.5% penetration by 2030, as direct decentralized retail trends gain mainstream traction. * Shopify goes from about 0% physical retail market penetration today, to about 0.5% penetration by 2030, as Shopify finds some success in the physical retail world. * Total gross merchandise volume (GMV) and Merchant Solutions revenue grow at about 30% annualized pace into 2030. * Subscription Solutions revenue grows at a high teens annualized pace, as Shopify continues to grow its merchant base. * Total revenue grows at a 25%-plus pace over the next decade. * Operating margins scale from 1% today, to 25% by 2030, as robust revenue growth drives significant operating leverage on already huge gross margins. * 2030 EPS settles around $25, versus projected EPS in 2019 of $0.60.Long-term Price Target: About $750, based on a commerce platform average 30-forward multiple on projected fiscal 2030 EPS of $25.Present Value: About $300, based on a 10% discount rate and a 2029 price target of $750. The Trade Desk (TTD)TTM Gain: 160%The Bull Thesis Tag Line: "The Future of Advertising"Core Bull Thesis: The secular bull thesis on The Trade Desk centers around something called programmatic advertising. Programmatic advertising is essentially automation in the ad industry. Before, ad spend allocation was largely a guess-and-check effort, while ad transactions were conducted between two human parties. Programmatic advertising automates both of those processes, leveraging AI and big data to optimize ad spend allocation and dynamically transact ads based on those optimal allocations. In this sense, programmatic advertising is the future of advertising.The Trade Desk is one of the most important players in the programmatic advertising world, and one of the fastest growing, too. But, ad spend through the TTD platform measures less than 1% of the near $300 billion global digital ad market. That market is rapidly marching towards $500 billion-plus levels. Eventually, most of that $500 billion-plus worth of spend will be transacted programmatically, and the lion's share of that programmatic spend will happen through TTD.As such, The Trade Desk has huge growth potential over the next several years through automation in the ad world, and if all that growth potential materializes as expected, TTD stock will fly higher from here.Key Growth Projections: * The global advertising market measures around $1 trillion by 2025, up from $650 billion-plus this year. * The digital ad market grows to around $650 billion by 2025, representing 65% share versus 45% share in 2018, as engagement and ad dollars continue to flow into the digital channel. * TTD grows its share in the digital ad market from less than 1% in 2018, to 2-2.5% by 2025, as programmatic advertising becomes more widely used across various ad formats and channels. * Gross spend on TTD and revenues grow at a 25%-plus pace into 2025. * Profit margins gradually move higher as robust revenue growth drives positive operating leverage on healthy gross margins. * 2025 EPS comes in around $15, versus 2019 estimates of $2.90. * 10 Stocks to Sell for an Economic Slowdown Long Term Price Target: About $375, based on a digital ad average 25-forward multiple on projected 2025 EPS of $15.Present Value: About $230, based on a 10% discount rate and a 2024 price target of 375. Adobe (ADBE)TTM Gain: 20%The Bull Thesis Tag Line: "The Cloud Giant in a Visually Dominated World"Core Bull Thesis: The secular bull thesis on cloud giant Adobe is predicated on two very simple ideas: First, the world is becoming increasingly obsessed with visuals. Consumers are increasingly engaged in visual-first social media apps, like Instagram and Snapchat. They are also spending more time on visual-content-heavy streaming platforms like Netflix. At the same time, businesses are increasingly using visuals to communicate with their customers, since these forms of communication are what resonates most deeply with today's consumer. Thus, both consumers and enterprises are shifting to a more visually-focused world.Second, Adobe is the unrivaled king in delivering visual solutions. Sure, there are a ton of Adobe competitors out there, but none really rival Adobe. They are all just knock-offs. Long story short, Adobe dominates the visual-focused industry, and when it comes to creating visuals on both the consumer side (e.g. editing a photo for Instagram) and the enterprise side (e.g. creating a visually aesthetic ad campaign), everyone turns to Adobe solutions.Put those two ideas together, and it becomes increasingly obvious that Adobe has plenty of room to grow over the next several years as both consumers and enterprises increasingly adopt visual-focused cloud solutions.Key Growth Projections: * Adobe's Document Cloud, Creative Cloud, and Experience Cloud businesses continue to grow at a robust pace over the next several years given digital and visual related tailwinds, and ultimately power about 15% annualized revenue growth into 2025. * Gross margins expand gradually towards 90% as Adobe benefits from steady but small price hikes given lack of competition. * Operating margins expand towards 50% as 15% revenue growth drives healthy operating leverage on huge gross margins. * EPS settles around $23 by fiscal 2025.Long Term Price Target: About $460, based on a growth average 20 forward multiple on projected fiscal 2025 EPS of $23.Present Value: About $290, based on a 10% discount rate and a fiscal 204 price target of $460. Roku (ROKU)Source: Shutterstock TTM Gain: 111%The Bull Thesis Tag Line: "The Cable Box of the Streaming World"Core Bull Thesis: When I first created the STARS acronym, the most controversial stock on the list was Roku, given what many perceived as huge competition risks. But, ROKU stock is up 111% over the past year as the company's secular bull thesis has drowned out competition risks.The core bull thesis here is that Roku is becoming the central access point (or "cable box") of the streaming world -- a platform which consumers everywhere rely on to access their favorite streaming services like Netflix, HBO, Amazon Video, and the like.A year ago, there were concerns that Roku couldn't maintain this "cable box of the streaming world" positioning because bigger competitors would come in and gobble up its customer base. But, those concerns missed three big things: 1) Roku is content-neutral, it's competitors aren't, and this content neutrality ultimately makes for a more friction-less viewing experience; 2) Roku is already the runaway leader in this space, and consumers like the intuitive Roku UI; and 3) the streaming space will big enough to accommodate more than one service platform aggregator.As such, Roku has done nothing but rattle off big-growth quarter after big-growth quarter over the past year, and ROKU stock has more than doubled in the process. The streaming market globally is still relatively nascent, and ad dollars are just now starting to follow consumers into the streaming channel, so Roku's long-term growth narrative is in its first few innings. Over the next several years, the company will continue to rattle off big-growth quarters and ROKU stock will trend higher.Key Growth Projections: * The global streaming-video-on-demand (SVOD) market grows from roughly 300 million households today (25% TV household penetration), to around 600 million households by 2025 (35% TV household penetration, assuming mild global TV household growth). * Roku's platform goes from about 30 million accounts in 2018 (about 10% market share) to about 100 million by 2025 (about 17.5% share). * Average revenue per user rises at roughly 15% per year into 2025, as unit SVOD revenue moves higher due to higher streaming service prices and more streaming service subscriptions per account, and AVOD revenue moves higher from a higher inflow of ad dollar volume. * Total revenues rise at a 25%-plus pace into 2025. * Platform gross margins scale towards 70%, while player gross margins stay around 5%. * The opex rate drops to 40% as robust revenue growth drives significant operating leverage. * EPS settles around $5.50 by 2025. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Long Term Price Target: About $165, based on a big growth 30-forward multiple on projected fiscal 2025 EPS of $5.50.Present Value: About $100, based on a 10% discount rate and a projected 2024 price target of $165. Square (SQ)Source: Shutterstock TTM Gain: 22%The Bull Thesis Tag Line: "The Backbone of Modern Commerce"Core Bull Thesis: The secular bull thesis on Square is based on the idea that Square is transforming into the backbone of the the modern commerce world by creating a payments ecosystem tailored to 21st century consumption and retail habits.Consumers globally are pivoting away from cash transactions towards non-cash transactions, because non-cash transactions are significantly more convenient and more levered to digital shopping. As such, global non-cash transaction volume has risen at a steady 10%-plus clip for the past several years.Over the next several years, non-cash payments volume is expected to run at a 10%-plus pace, driven by heavier card usage in developed economies and broader urbanization and digitization in developing economies.Square has built a payments platform which helps merchants of all shapes and sizes process these non-cash transactions. On top of that, the company has developed a myriad of tangential solutions - such as a digital peer-to-peer payments app, an enterprise payroll app, and lending services - all of which are tailored to the consumption and retailing habits of the 21st century.Square is developing a payments ecosystem which is built for modern commerce. Yet, the platform still only accounts for 0.35% of all global retail sales. As such, the trends and addressable market here imply that Square has a lot of room and firepower to grow over the next several years.Key Growth Projections: * Global retail sales grow at a 5% compounded annual growth rate into 2025 to nearly $34 billion, due to inflation and global urbanization trends. * Square's market share of the global retail sales pool rises from 0.35% in 2018, to 1% by 2025, as the company expands its reach in the physical retail world from micro-merchants to bigger merchants, and as the company takes a deeper dive into the e-commerce world. * Square GPV grows at a 20%-plus annualized pace into 2025, while revenues grow at at 25%-plus annualized pace, driven by incremental revenue from hardware and ancillary solutions. * Profit margins move steadily higher over the next several years as increased scale drives positive operating leverage. * EPS settles around $4.50 by fiscal 2025.Long Term Price Target: About $135, based on a payments stock average 30-forward multiple on fiscal 2025 EPS of $4.50.Present Value: About $85, based on a 10% discount rate and a fiscal 2024 price target of $135.As of this writing, Luke Lango was long FB, AMZN, NFLX, GOOG, SHOP, TTD, ADBE, ROKU, and SQ. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post 5 STARS Stocks Smashing the Market (FANG Stocks, Too) appeared first on InvestorPlace.
Beyond Meat stock, up more than 560% since its May debut, leads five hot stocks setting up new buying opportunities. Zoom and Shopify are also on the list.
Shopify (NYSE:SHOP) has had an incredible run. Since January the price has almost tripled, before pulling back to current levels around $310. Many investors are wondering if it is time to sell their SHOP stock holdings.Source: Shutterstock Wall Street feels that the shares are fairly valued. Some 28 firms follow SHOP and the average price target is $325. But then again, these highly paid pros that make these predictions are often wrong.The vast majority of discussions about investments are about what to buy. Lists of stocks to buy and stock recommendations are all over the financial media. I very rarely see any discussions or advice concerning selling or what stocks to sell.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThis is ironic because knowing how to sell can be more important than knowing what to buy. When investors hold a stock they become fearful. If the stock goes down they are afraid of taking a loss and if it goes up they become afraid of losing their profit. This causes people to sell their winners too soon and to hold onto their losers for too long. Sound familiar? * 7 Retail Stocks to Buy for the Second Half of 2019 Adrenaline-driven Irrational DecisionsFear makes adrenaline levels rise. This evolutionary response to fear may have benefited humans 20,000 years ago if they were being chased by a saber tooth tiger or hunting a woolly mammoth, but it is not beneficial to trading and investing. This adrenaline rush causes people to make irrational decisions. This is why computers and algorithmic trading increasingly dominate the markets. These computers do not have emotions so they do not make the same emotionally driven mistakes that humans do.This leads us to the most important rule of successful trading or investing: Do not enter a position unless you know where you are going to sell. You should know where you will sell to take your profits and you should know where you will bail out and take your losses. If you have these levels clearly defined it will help prevent you from losing money by making an irrational decisions. If you do not know how you are going to sell then you are just guessing. You would be better off at a casino. You'll still lose money, but at least you can get free drinks and maybe Cirque du Soleil tickets. Selling SHOP StockHere is how I would apply this to SHOP stock. One possible profit target would be $330. This is a logical target because it was where the high was on June 20. A second possible way to profit is to sell it when it becomes overbought again. As you can see on the chart, the last three times SHOP became overbought it was a selling opportunity, The stock trended lower afterwords each time. A third possible sell-for-profit target would be $325, the average price target of the firms that follow it. It really doesn't matter which target you use. The important thing is to have a set target or sell rule so when SHOP gets to your level, you will know what to do. This will help prevent emotional mistakes. * 10 Stocks to Sell for an Economic Slowdown For determining where to take a loss, the logic is the same. Which rule or target you use isn't as important as having a set rule or target. The idea is to take the emotions out of it. It isn't to try to mastermind the markets.A trailing stop is one way to do it. This would be to sell it if it falls a certain percent. For example, if you have a trailing stop of 5% you would sell SHOP if it fell to $304. Another potential sell technique could be to sell if the uptrend breaks. There has been a well-defined uptrend here. The breaking of this trend-line could be a signal to sell. A third method could be a moving average (MA) crossover. For example, sell if the 10-day MA crosses down through the 20-day MA.Bottom Line on Selling Shopify StockIf you understand that we humans have not evolved in a way that is conducive to successful investing you'll dramatically improve your results. Our emotional response caused by the fear of losing money causes us to make irrational decisions. A way to deal with this is to remember and implement the most important rule of investing. You should know where you will sell to take your profits and where you will bailout and take your loses before you buy a stock. Those rules apply here with Shopify stock.Disclosure: As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post As Analysts See Shopify Stock as Fairly Valued, Investors Ponder How to Sell appeared first on InvestorPlace.
As Shopify continues to shape e-commerce, its revenues and stock are soaring ahead. Investors looking to join in the opportunity are being asked to pay up for quality, however.
We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is...
Shopify Inc. , the leading multi-channel commerce platform, plans to announce financial results for its second quarter ended June 30, 2019 before markets open on Thursday, August 1, 2019.
Investors in online marketplace Shopify (NYSE:SHOP), one of Canada's best tech names, have enjoyed the stock's stellar move up in 2019; so far this year, SHOP stock has soared 133%. On June 20, the Shopify stock reached an all-time high of $338.94.Source: Shopify via FlickrShopify is expected to report its second-quarter earnings on July 30. Now that SHOP's earnings are approaching, let's look at what may be next for SHOP stock, which has been a darling of Wall Street since its IPO in 2015. SHOP's Q1 Earnings and BackgroundOn Apr. 30, SHOP reported strong Q1 results that beat analysts' average estimates on both the top and bottom line, thanks to strong demand for its subscription solutions. Shopify reported revenues of $320.4 million, which was up almost 50% year-on-year. Its net loss came in at $24.2 million.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Retail Stocks to Buy for the Second Half of 2019 In a nutshell, Shopify sells out-of-the-box e-commerce solutions. The company's growth comes from two segments: "Merchant Solutions" and "Subscription Solutions."Merchant Solutions includes tools that enable merchants to serve their customers better and sell more products. Within Merchant Solutions, SHOP offers payment services, shipping services, and a working capital management tool.Subscription Solutions offer merchants of all sizes monthly recurring subscription plans that cost from under $10 to over $2,000 per month. SHOP now has over 800,000 sellers, an increase of 25% over the past year.Shopify Plus, the premium version of Shopify, has over 5,300 customers, including names like Johnson & Johnson (NYSE:JNJ), Unilever (NYSE:UL), and the Obama Foundation.A quarter of the company's monthly recurring revenues comes from Shopify Plus merchants. SHOP has recently launched a multi-currency feature for Shopify Plus merchants who also use Shopify Payments.During the Q1 earnings conference call, CEO Tobi Lutke stressed that SHOP would continue to innovate and launch new products and services for both merchants and their customers. Wall Street also expects the company to continue to grow via acquisitions. Shopify Stock's Global GrowthManagement has also been looking at expanding overseas, especially in non-English-speaking countries, as the company's next key growth area. In Q1, the company's overseas customer base grew, enabling its international revenue growth to accelerate.Earlier in the year, Shopify launched its payment gateway, Shopify Payments, in Germany, making bank account transfers possible there. Several of Canada's provinces have used Shopify to launch online cannabis stores, giving Shopify even more global visibility.In its efforts to expand beyond the core English-speaking countries, the company has recently made the Shopify website available in six other languages: French, German, Japanese, Italian, Brazilian Portuguese, and Spanish; the website is soon expected to be available in 11 languages.In other words, Shopify is an attractive company with excellent growth prospects in cloud-based e-commerce , both in North America and globally. However, investors also need to be aware of some question marks facing SHOP stock. Should Investors Be Concerned About the Valuation of SHOP Stock?SHOP stock bears point out that, given the high valuation of Shopify stock, the shares would be hit hard if a recession occurs. Even if the stock market does not go up as rapidly as it has over the past decade, then the momentum of high-flying names like SHOP stock will slow down, too.For example, SHOP stocks's price-sales (P/S) ratio is high enough to make value investors run for cover. Shopify stock's P/S ratio stands at about 30. To put the metric into perspective, the S&P 500's average price-sales ratio is 2.1.Another way to look at this number is to compare the company's current P/S ratio with its P/S ratios over time. Since going public, SHOP stock'a lowest and highest P/S level has respectively been 6.86 and 30.In other words, at present, its P/S ratio is at its highest level ever. That essentially means that the owners of SHOP stock are paying a lot more for Shopify stock now than they were when the P/S ratio was 6.Another way to analyze the P/S ratio is to compare it with the ratios of companies in similar sectors. The P/S ratio of Amazon (NASDAQ:AMZN) is four. Alibaba's (NASDAQ:BABA), P/S ratio stands at eight. And MercadoLibre (NASDAQ:MELI) stock's P/S is 17.Although the P/S ratio of SHOP stock is very high, investors should also remember that it is only one of many valuation metrics. Moreover, it does not take into account the profitability or costs of Shopify. What Else Could Derail SHOP Stock?SHOP bulls are happy to point out that the company's revenue growth is showing no sign of slowing down.But on the other hand, Shopify has not yet reported any profits. If SHOP cannot keep meeting the Street's aggressive growth forecasts, then the owners of SHOP stock may become more concerned about its lack of profit, and Shopify stock could drop.During Q1, SHOP launched its TV and film content division, Shopify Studios, Wall Street is debating why Shopify has decided to create such content. And in June, SHOP announced that it would be launching a fulfillment network and offer two-day shipping across 99% of the continental U.S. Analysts believe this ambitious strategy is likely to be quite costly for Shopify.Instead of focusing on profits, management wants to expand the company by launching new businesses. Therefore, those who plan to own SHOP stock over the long-term need to pay attention to the cash flows from its new ventures.Many investors have been quite concerned about the various reports by short seller Citron Research which regards Shopify's business model as a "get-rich-quick-scheme." Moreover, several analysts have recently downgraded SHOP stock in response to its stellar bull run.Finally, those investors who follow short-term technical charts will be interested to know that Shopify stock has spent a good portion of 2019 in overbought territory. It is possible that some profit-taking will negatively impact SHOP stock in the near future, possibly prior to its Q2 earnings report. The Bottom Line on Shopify StockIn a few weeks, SHOP stock is likely to release another strong quarterly report. However, SHOP stock is simply too expensive for me to hit the "buy" button on it at these levels.SHOP is a growth stock and a speculative stock. Therefore, in the coming weeks, I expect SHOP to be a battleground between investors and traders. While long-term investors would like to see Shopify stock go over the $350 level, traders are likely to keep it between $300 and $250.Those who have benefited from SHOP's 2019 gains should possibly consider taking profits as we look ahead to the next earnings report.Well-performing stocks tend to keep on winning, and the recent strength of Shopify stock might be a good indication that within three or four years, investors who buy SHOP on weakness are likely to be rewarded handsomely.As of this writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post Is Shopify Stock Getting Ahead of Its Fundamentals? appeared first on InvestorPlace.
As many pundits and analysts have pointed out, there's no doubt that the valuations of Square (NASDAQ:SQ) and Shopify (NASDAQ:SHOP) are huge. The gigantic valuations of Square stock and SHOP stock may prove to be justified, if pretty much everything goes their way, enabling their businesses to continue to quickly expand and become much more profitable. Source: Chris Harrison via Flickr (Modified) Stepped-up competition from companies like Amazon (NASDAQ:AMZN) and PayPal (NASDAQ:PYPL), or macro factors like an intense recession are a real threat, though. If they don't find a way to keep growing their businesses and profits rapidly, the valuations of Square stock and Shopify stock will prove to be too high. As a result, Square stock and Shopify stock will drop rapidly. * 10 Best Stocks for 2019: A Volatile First Half At this point, given all of the potential obstacles SQ and SHOP are facing, along with their gigantic valuations, I think they each only have a roughly 35% chance of preventing their stocks from eventually dropping sharply in the next year or two.InvestorPlace - Stock Market News, Stock Advice & Trading TipsMoreover, I would estimate that there is only a 10% chance that either SQ stock or SHOP stock will rise more than 300% over the next five years. How to Jumpstart Square Stock and SHOP StockBut, by combining forces, SQ and SHOP would dramatically increase their chances of lighting a fire under SQ stock and SHOP stock.The main concept is pretty simple. A merger of equals would create one of the biggest cross-selling opportunities in history. Of course, most of Square's customers currently use its products to make face-to-face sales, and most of SHOP's customers use its products to build online stores.Put a different way, SQ primarily services customers who concentrate on selling their products in brick-and-mortar stores or on the road, while SHOP's bread and butter is facilitating online sales.There is likely a bit of overlap between the two companies' customer bases, since some businesses are beginning to have a physical and online presence, and the lion's share of businesses currently focus on one venue or the other.So if the two companies merge, they could greatly increase their customer bases by aggressively marketing their products to the other's customers.Specifically, SQ could sell its point-of-sale tools and its debit card to SHOP's customers, and SHOP could market its software and platform to Square's customers.As InvestorPlace columnist Luke Lango has pointed out, retail is now a combination of brick-and-mortar and e-commerce. Consequently, many of Square's physical-only customers will eventually look to sell their products online, while many of SHOP's online-only customers will eventually try to sell their products face-to-face.By merging, SHOP and SQ can more efficiently target each other's customers, since SQ will have easy access to the contact information and other data on SHOP's customers and vice versa. Square Stock and Raising CapitalI believe that many investors and banks would be tremendously enthusiastic about a merger between SQ and SHOP. As a result, SQ stock and SHOP stock would rise dramatically going into and immediately after the deal.Furthermore, banks would jump to lend money to the companies at very favorable terms. The rally of Square stock and Shopify stock, along with the companies' new loans, would enable them to recruit more and better talent using stock-based compensation and higher salaries.They could also acquire more and better companies, and sell shares of SHOP stock and SQ stock to raise a great deal of additional money. Using the additional funds, they could develop and launch new products, such as insurance and wealth management services, both of which, by the way are offered by Alibaba's (NYSE:BABA) fintech unit, Ant Financial. Alibaba Has Shown the WaySpeaking of BABA, after combining forces, SQ and SHOP will have access to a tremendous amount of customer data and capital. Using those assets, they can expand into many businesses and efficiently use artificial intelligence to become the American version of Alibaba.Thanks to its data on small businesses, large investments, and prolific use of AI, BABA's ecosystem has successfully expanded into many areas other than e-commerce, including lending, logistics, online payments and advertising.Merging would indeed enable SQ and SHOP to emulate BABA, become one of the most valuable companies in the world and closely rival or even surpass Amazon.As of this writing, the author did not own shares of any of the companies mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 A-Rated Stocks to Buy for the Rest of 2019 * 7 Education Stocks to Buy for the Future of Academia * 5 Stocks to Buy as You Rebalance Your Portfolio The post A Merger with Shopify Could Be What SQ Stock Needs to Keep Popping appeared first on InvestorPlace.
The company's recent investments in expansion and innovation should pay off handsomely for Shopify investors.
As more and more people strike out on their own into the world of business, here are three companies helping the transition for these "solopreneurs."
Shopify stock has been a huge winner in 2019. Shopify earnings are booming and the company plans to compete more with Amazon. But is SHOP stock a buy now?
Shopify stock has risen nearly 130% year-to-date as investors are growing more optimistic about its e-commerce infrastructure platform.
KeyBanc Capital Markets analyst Josh Beck wrote Monday that Shopify Inc.'s scale "could rival Amazon" in a few years as the company rolls out new features and addresses gaps in its product offering. "We see the opportunity for payments gross margin to improve as international adoption ramps and by 2023E outline a scenario where gross merchandise volume could exceed $200 billion, rivaling Amazon's current first-party business that was ~$120 billion last year," he said. Beck is upbeat about recently announced offerings around fulfillment, currencies, and developer tools. He raised his price target on Shopify shares to $350 from $300 and maintained an overweight rating. Shares are up 2% in morning trading, and they've gained 131% so far this year. The S&P 500 has climbed 19% in that time.
(Bloomberg) -- Online retail giant Amazon.com Inc. could face a viable competitor in Shopify Inc., according to KeyBanc analyst Josh Beck.KeyBanc’s checks and bottom-up segment model suggest Shopify’s gross merchandise volume will eventually rival Amazon’s first-party sales, Beck wrote in a note to investors Sunday. “Overwhelmingly positive” feedback from partners, developers and merchants at three recent industry conferences prompted Beck to raise his 2020 revenue estimates and lift his price target on the stock to $350 from $300.Shopify unveiled an “impressive array of product launches” for its e-commerce platform, including “complex” shipping automation capabilities, multi-currency features and improved developer tools, Beck said. He estimates the company’s market share could triple to about 9% within five years.KeyBanc has an overweight rating on Shopify’s stock, which had gained 127% year to date through Friday’s close in New York. The Ottawa-based company’s shares hit a record high on June 20 after it announced plans to spend $1 billion to set up a network of fulfillment centers in the U.S.To contact the reporter on this story: Derek Hall in Chicago at firstname.lastname@example.orgTo contact the editor responsible for this story: Catherine Larkin at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
This weekend's Barron's presents 11 cheap blue-chips in a pricey market. Other featured articles name cheap stocks that are cheap for a reason and how to play stocks that are mired in controversy. Also: the ...
Shopify (NYSE:SHOP) has been at the forefront of empowering entrepreneurs in this tech-driven age to run their own online businesses across all geographies. They have successfully developed tools that meet a growing need, and the market has rewarded this success, driving SHOP stock up more than 125% in the first half of 2019.Source: Shopify via FlickrFor those who have missed out on those gains, fear not. There is good reason to believe that SHOP stock will continue to further expand its outperformance in the second half of the year. Analysts at Canaccord last month said, "In our view, Shopify is getting to point at which breadth of product, vibrancy of partner ecosystem, and general retail scale will enable the firm to pull away at an exponential pace." That came with a bump in the analysts' target to $360, "ahead of a more strenuous valuation analysis later this summer," they wrote in a note to clients.As I see it, doubling down on revenue streams in capital lending, bolstering its fulfillment network, and the launch of Shopify Studios should drive SHOP stock to the $400 mark.InvestorPlace - Stock Market News, Stock Advice & Trading Tips SHOP Stock Takes a Note From BanksLending is a great business. Screen and rank potential borrowers, offer customized loan amounts and interest rates, and you have a recipe for printing money. Shopify has been able to leverage its relationship with merchants to build a capital business, not unlike Square (NYSE:SQ). * 7 F-Rated Stocks to Sell for Summer Shopify Capital is progressively contributing more to the consolidated top line results. In the first quarter of the year, the unit issued $88 million in merchant cash advances and loans, an increase of 45% year-over-year.In cumulative cash advanced, Shopify Capital has grown to $535 million since launching just over three years ago (with $107 million outstanding as of the most recent quarter.) SHOP has tapped into a need, and it would be unsurprising to see both the share of revenue contribution continue to grow. SHOP Could Go Toe-to-toe With AMZNShopify recently discussed its plans for a "shopper fulfillment network" that will match Amazon.com (NASDAQ:AMZN) in delivery time. It's a big step for SHOP, but one that will pay dividends as the company proves that it adds value for its large network of merchants.In the first quarter, Shopify Shipping adoption rates were already on the ascent, with more than 40% of eligible merchants in the U.S. and Canada using Shopify Shipping in the period. With this next move to shrink shipping times, that rate will undoubtedly increase in the second quarter.SHOP is making commerce easier, more accessible, and better for everyone and this is proving to be a winning formula. * The 7 Top Small-Cap Stocks Of 2019 SHOP Stock Goes HollywoodEarlier this year, the latest SHOP stock catalyst debuted, with the launch of Shopify Studios, a full-service TV and film content development and production house. The intended goal is to redefine and inspire entrepreneurship through accessible, relevant, and entertaining content, paving the path for future business owners and innovatorsIt may seem like a ploy to just get into the content game like so many tech companies have been as of late. For SHOP though, there is a more strategic angle.You have to think about the ecommerce funnel. Conversion is the name of the game. At a micro level SHOP's job is to convert the interest/browsing into an actual sale. Beyond that, it's about building a brand so that when people look to buy, they go straight to your platform. This ties into owning an entire ecommerce category.That's what the studio initiative is about. It's the first broad-based marketing campaign of its kind in Shopify history. It has a good shot at driving traffic and brand awareness, which all bode well for SHOP stock.As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks That Should Be Every Young Investor's First Choice * 5 IPO Stocks to Buy -- According to Wall Street Analysts * The Top 10 Best Sectors in the Market for 2019 The post 3 Catalysts That Could Fuel Shopify Stock To The $400 Level appeared first on InvestorPlace.