40.52 +0.14 (0.35%)
After hours: 7:59PM EDT
|Bid||40.38 x 4000|
|Ask||40.36 x 2900|
|Day's Range||40.23 - 40.53|
|52 Week Range||26.01 - 42.00|
|Beta (3Y Monthly)||1.21|
|PE Ratio (TTM)||15.61|
|Earnings Date||Oct 28, 2019 - Nov 1, 2019|
|Forward Dividend & Yield||0.56 (1.40%)|
|1y Target Est||42.21|
On its face, Shopify (NYSE:SHOP) stock looks like a bubble, or something close. Shopify stock has risen 190% in 2019 alone, adding almost $25 billion in market capitalization in the process. It trades at 373x 2020 consensus EPS and almost 20x next year's average revenue estimate.Source: BalkansCat / Shutterstock.com In a market that -- in tech in particular -- looks dearly valued, SHOP stock seems like Exhibit A in the argument that U.S. equities have run too far. And yet those analysts -- myself included -- who have decried the stock's valuation have at best missed out on profits and at worst been run over. * 10 Marijuana Stocks to Ride High on the Farm Bill I wrote earlier this month that there was little reason to see the run ending any time soon. This is a momentum play, and that momentum remains intact. As I noted earlier this year, the company's move into fulfillment opens up new opportunities for the company, and for Street growth models. At least one analyst already has jumped on board.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut those factors don't necessarily answer the broader question here: is Shopify overvalued? To be honest, I still believe that it is, at least from a truly fundamental standpoint. This is a wonderful business, but there are worries about its resilience in a recession. And the valuation incorporates something close to perfection for years to come.That said, it's worth noting that there is a fundamental case here. This isn't a pure bubble, like so many stocks were in the first dot-com era of the late 1990s. It's hard to make the case that SHOP stock is cheap. But looking past the headlines, there is at least a way to justify the current valuation -- and maybe even a bit more upside. How Margin Expansion Can Boost SHOP StockShopify's earnings multiples admittedly look close to absurd, whether it's the 370x+ forward P/E or a 2019 EV/EBITDA multiple likely in the 500x range.But those multiples are impacted by the fact that Shopify's margins are razor-thin right now. Adjusted operating income in 2018 was just 1% of revenue. In the first half of 2019, that figure has held, while improving from a negative 1% print the year before.As those margins expand, earnings are going to grow exponentially even ignoring continued top-line improvements. Operating margins have expanded about 200 basis points (bps) in the first half; if the company repeats that performance in the second half, while posting its expected 43% year-over-year revenue growth, operating income should rise more than 400%.It's not as if Shopify is done with that expansion. Even assuming margins get to 3% this year, there's still a nice path to over 10%. This is largely a subscription revenue business after all, even if gross profit on merchandise sales are much lower. Incremental margins (the profitability of added revenue dollars) should be quite high.Meanwhile, Shopify still is investing in its business, with sales and marketing alone still about 30% of revenue. A more mature business can get that figure down dramatically. Revenue growth will boost gross margins and leverage G&A and R&D spend.Consensus EPS for next year appears to imply a roughly 6% operating margin. Get that figure to 15% and double revenue -- the latter of which Shopify should be able to do by 2023 -- and P/E gets down to a more reasonable (if still very expensive) 70-80x.That doesn't mean SHOP stock is cheap. But we've seen SaaS plays like Salesforce.com (NYSE:CRM) trade at above 40x for years. Fulfillment profits should start arriving a few years from now. At the least, Shopify stock can go from being "absurd" to simply being expensive. That might be enough. Comparing SHOP Stock to AMZN StockThere's another way to look at Shopify's valuation that makes it seem at least potentially reasonable. According to estimates cited in Shopify's most recent presentation, Amazon (NASDAQ:AMZN) has 47% share of U.S. eCommerce. Shopify has one-tenth that penetration, at 4.7%.It's too simplistic to argue that Shopify, then, should be worth roughly one-tenth of Amazon, or almost $90 billion. Amazon's valuation, of course, includes Amazon Web Services, which one analyst believes could be worth $500 billion. Amazon's greater scale should be more valuable. And, of course, Shopify's market share doesn't actually come from the company, but rather its merchants. Shopify gets only a portion of those revenues (which it refers to as GMV, or gross merchandise value) via subscription and payment fees.That said, Amazon's North American business likely is worth $500 billion or more. It, too, has a huge reseller business. And its profit margins in North America, about 5%,aren't exactly enormous.No. 2 on the list is eBay (NASDAQ:EBAY), at 6.3%. eBay is worth $35 billion. Given that Shopify almost certainly will pass that online reseller in the next few quarters, is there at least an argument that SHOP stock should be more valuable? And maybe much more valuable? The same is true of Square (NYSE:SQ), a semi-competitor which, even after a recent plunge, is valued at roughly $25 billion excluding cash.Again, this is not to say that Shopify stock is cheap. It isn't. I wouldn't pay $370 a share for it. And if the entire market is overvalued, as many fear, these comparisons will break.But here, too, there's at least a way to see the valuation as something short of ridiculous. Right now, given the short-term enthusiasm behind Shopify stock, that too might be enough.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Marijuana Stocks to Ride High on the Farm Bill * 8 Biotech Stocks to Watch After the Q2 Earnings Season * 7 Unusual, Growth-Oriented REITs to Buy for Your Portfolio The post There Is a Fundamental Case for Shopify Stock appeared first on InvestorPlace.
A new Bank of America Merrill Lynch report lays out a dozen stocks to have during the recession. Half of them are for companies either based in Silicon Valley or that have a strong presence here.
on original shows and movies for its new video streaming service that it hopes will challenge the likes of Netflix, Disney and AT&T-owned HBO. The company’s new TV+ service will go live within the next two months, according to people briefed on its plans, in an attempt to pre-empt the launch of Disney Plus, which is scheduled to debut in the US in November. Apple has not yet revealed pricing or other key details for its TV+ subscription service, but said new content would be added every month after the service launches in more than 100 countries.
Tobi Lütke, the Shopify chief executive, prefers his employees to refrain from checking the ecommerce company’s share price too often. Shopify’s shares, which first listed on the New York Stock Exchange in May 2015, have been on a tear this year. “I had to remind everyone in [corporate messaging app] Slack that our share price is based on supply and demand, and is something that Wall St does,” said Mr Lütke, comparing the equity markets to sports betting.
Reportedly, Alibaba Group Holding (BABA) has agreed to acquire an e-commerce company, Kaola Unit, from NetEase Inc. for approximately $2 billion.
For sellers looking to make extra cash from online retailing, the decision to go online is easy but the choice between eBay and Amazon might not be so easy.
Alibaba Group Holding's (BABA) fiscal first-quarter 2020 earnings are driven by steady improvement in core commerce and cloud businesses, along with strong growth in metrics.
The latest round of 13F filings from institutional investors were out this week, revealing to the world the stocks that some of the richest and most successful investors have been buying and selling. Takeaways ...
(Bloomberg) -- When Swedish banking firm Klarna became Europe’s most valuable financial technology startup last week, it was only the latest sign that digital finance has escaped the troubles afflicting legacy lenders.Its latest fundraising gave Klarna, which facilitates online installment payments, a $5.5 billion valuation. European fintech companies raised $3.3 billion in venture capital in the first half of 2019, up from $1.9 billion in the same period last year, according to data compiled by CB Insights. In contrast, an index of European Union banks has dropped 39% the past 18 months.“Investors are drawn to it because it’s the perfect blend of a huge, mature industry which, empowered by technology, can deliver vast returns, far in excess of what you see if you’re starting up out of nowhere,” said Ben Brabyn, chief executive officer of Level39, one of Europe’s largest fintech accelerators, in an interview.Here are a few other recent industry highlights and what to watch out for next.Fintechs Flout Brexit WorriesLondon fintechs defied the Brexit gloom that descended on the the U.K. Transferwise Ltd. announced a funding round in May that valued the eight-year-old company at $3.5 billion, up from $1.6 billion in 2017. A few weeks later, online bank Monzo closed a new funding round doubling the startup’s valuation to more than $2.5 billion. Meantime, Revolut Ltd., while being eyed by regulators for possible compliance lapses, expanded into stock trading. They weren’t all winners: shares of peer-to-peer lender Funding Circle Ltd. have plunged 65% this year.IZettle’s Surprise PayPal SaleIt was the midnight deal that surprised many -- PayPal Holdings Inc. purchased iZettle AB for $2.2 billion in May 2018 the night before the Swedish startup had planned to price its shares in an initial public offering. Stockholm-based iZettle competes with Twitter co-founder Jack Dorsey’s Square Inc., and Canada’s Shopify Inc.Adyen Soars After IPODutch payments processor Adyen NV hit headlines for two reasons last year. First, in February, it was announced the Netherlands-based firm would replace PayPal as EBay Inc.’s global checkout service. Then in June, it held a billion-dollar IPO and saw its shares surge 90% in the first day of trading. The company, whose clients include Netflix Inc. and Spotify Technology SA, is now valued at 20 billion euros ($22.4 billion)Worldpay’s $35.5 Billion DealAs one of the world’s biggest payments firms, Worldpay Inc. handles about $1 trillion annually -- similar to Chase Paymentech. When Fidelity National Information Services Inc. said on July 31 it’d completed its $35.5 billion acquisition of the company, data compiled by Bloomberg showed the combined business will be the world’s biggest in the processing and payments industry. It wasn’t a bad day for Ohio-based Worldpay, which less than two years earlier had been a British enterprise snapped up for 7.7 billion pounds ($9.3 billion) by U.S. merchant acquirer Vantiv.What’s Next?N26, the German mobile bank backed by billionaire Peter Thiel, announced in July it had extended its most recent fundraising round to $470 million, at a valuation of $3.5 billion. The company is expanding from Europe to the U.S., betting it can attract users from established lenders and credit card providers with free accounts, fewer fees and phone alerts.Other companies to watch include Revolut, which despite multiple run-ins with controversy remains exciting to investors after it held one of the biggest fundraising rounds for a European fintech last year, and app-based banks Monzo and Starling, which are attracting customers at a rapid clip.Further down the line is the U.K.’s online lender Zopa Ltd., which its CEO Jaidev Janardana said in July could potentially hold an IPO in 2021.“The valuations are encouraging but they’re not enough. They’re just an early indicator. The important numbers to watch are the customers,” said Brabyn. “We all need to step up to demonstrate the public value of what we do.”To contact the reporter on this story: Ali Ingersoll in London at email@example.comTo contact the editors responsible for this story: Giles Turner at firstname.lastname@example.org, Nate Lanxon, James HertlingFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
German publisher Axel Springer said it was actively looking at potential takeovers, even as a buyout of its minority shareholders awaits completion, amid speculation that the digital classifieds sector will consolidate in Europe. CEO Mathias Doepfner's comments on Wednesday came after Scout24 said it would explore a sale or spin-off of its autos platform, bowing to U.S. activist investor Elliott's call to break up the business. Doepfner, speaking after Springer reported a decline in second quarter revenue and earnings, said he had "no concrete thoughts" on those particular assets but was holding constant market soundings and analysing acquisition opportunities.
The gains in Shopify (NYSE:SHOP) stock continue. SHOP stock now has risen 176% in 2019 alone. It has more than tripled from December lows.Source: Shutterstock Shopify stock has had a truly staggering run. The company has added nearly $25 billion in market value in seven and a half months. And all the while, observers -- myself included -- have argued that SHOP stock is a bubble, or at the very least significantly overvalued.Yet Shopify stock marches higher regardless, climbing the proverbial "wall of worry." And as I have written of late, the stock could keep going. Fulfillment plans offer another reason for bulls to see even greater profits down the line. More broadly, investors have shown a willingness to pay up for growth.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Safe Dividend Stocks for Investors to Buy Right Now I still believe Shopify is overvalued. I called it out last month as one of 10 stocks set to crash at some point. The question after another blowout earnings report is when that point might come -- and what will be the catalyst. Could a Market Decline Hit SHOP Stock?The most obvious catalyst would seem to be a broad market decline. After all, when markets struggled in the fourth quarter of 2018, SHOP stock did as well.That said, SHOP didn't perform that badly. It declined 16% in the fourth quarter. But the NASDAQ Composite fell 18%. Square (NYSE:SQ), another high-growth, high-priced, small business play, dropped 43% over the same period. And some of the pressure on Shopify stock came from a secondary offering which the company priced at $154.Meanwhile, markets have seen some pressure at times this year, yet SHOP has been largely immune. Its only real weakness in 2019 came in June, after Roth Capital and Wedbush downgraded the stock on back-to-back days. (Those firms, too, cited valuation concerns.) There have been enough periods of market volatility this year to rattle Shopify stock again. So far, they've had little, if any, impact. SHOP Stock's Rising CompetitionAnother potential point of pressure could be on that competitive front. Square is looking to challenge Shopify as it integrates its 2018 acquisition of Weebly. Facebook (NASDAQ:FB) unit Instagram has launched In-App Checkout, which allows brands to sell products directly through that platform. And of course, Amazon (NASDAQ:AMZN) offers small businesses enormous reach as well.But it's tough to see anyone taking down Shopify any time soon. Going forward, the nature of digital platforms is that it gets harder for competitors to gain as those platforms grow and network effects take hold.And it's not as if anyone can simply enter the market and succeed. As Barron's reminded readers last month, eBay (NASDAQ:EBAY) acquired GSI Commerce for $2.4 billion in 2011 in an effort to capture the same market as a then-nascent Shopify. eBay sold the business for $925 million four years later, and it was split up by the new owners in 2016.Shopify's growth may slow; in fact, it almost certainly will given its exponentially increasing reach. At least at the moment, it's hard to see rivals gaining much, if any, market share. The Cycle TurnsI still believe there's one key risk here that investors haven't properly discounted: the macroeconomic cycle. Small businesses are notoriously at risk when a recession hits.Obviously, investors aren't terribly worried about this fact right now. Cyclical stocks on the whole are trading at low multiples -- yet SHOP stock keeps gaining. As cyclical fears have rattled U.S. stocks at points this year, SHOP has been unaffected.This is a company that still gets over 40% of revenue from subscriptions rather than its take rate on the sale of goods. The number of customers matters. And if the businesses paying for those subscriptions fail -- whether because the economy turns or because more entrepreneurs exist than perhaps should at the moment -- Shopify's growth will slow dramatically. What Can Stop Shopify Stock?These risks are real -- but, honestly, they don't look all that likely right now. At the very least, they're unlikely to change the narrative surrounding Shopify stock any time soon.So what does? Maybe nothing. SHOP stock is expensive, but it has been expensive for all of 2019. Investors keep buying it. That may stop at some point -- but I'd hardly be willing to bet against SHOP stock in the meantime.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post What Stops the Gains in SHOP Stock? appeared first on InvestorPlace.
Investors shaken by the stock market's pullback in August should be on the alert for even steeper declines ahead for six stocks with a range of vulnerabilities, including PayPal Holdings Inc. (PYPL), Dropbox Inc. (DBX), Molson Coors Brewing Company (TAP), MSG Network Inc. (MSGN), Domino’s Pizza Inc. (DPZ), and Dish Network Corp. (DISH). For its part, MSG Network's big challenge is loss of subscribers.
Alibaba Group (NYSE:BABA) will report earnings on Aug. 15 before market open. Over the past year, BABA has become one of the proxy companies in the U.S.-China trade wars. As the daily trade rhetoric intensifies, Alibaba stock becomes more volatile.Furthermore, in Hong Kong, where BABA stock is about to complete a secondary listing, has had weeks of political protests. The violence has forced the Hong Kong airport authority to cancel all daily flights over protests. Naturally, this uncertainty has led to further choppiness in the Chinese and Hong Kong stock markets.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs a result, the Alibaba stock price has been struggling lately. Therefore, in the upcoming quarterly statement investors will pay attention to not only the current results but also to what the expectations of Alibaba's management are for the rest of the year. * 7 Stocks Under $7 to Invest in Now So, what should BABA stock investors expect in the coming weeks amid escalating tensions and the tit-for-tat retaliation between the two countries? A Growing Ecosystem Boosts Alibaba StockAs Alibaba Group gets ready to release its quarterly results this week, investors should keep in mind that the company's share of the Chinese e-commerce space is over 55%.The group operates through three main ecommerce sites: Taobao, a Chinese online shopping website, Tmall, a Chinese-language website for business-to-consumer online retail, and Alibaba.com, an international trade site. Investors regard these sites as the Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY) of China.As of the end of March, Alibaba's mobile monthly active users (MAUs) on its China e-commerce platforms reached 721 million. This metric should obviously interest owners of Alibaba stock.Further, Alibaba is also rapidly expanding into many other lucrative industries aside from consumer products and retail. These segments include cloud computing infrastructure (i.e., Alibaba Cloud), digital payments (i.e., Ant Financial Services Group), online entertainment (i.e., Youku Tudou and Alibaba Pictures), and food delivery (i.e., Alibaba Local Services Company which is a merger between Ele.me and Koubei).Alibaba owns over 31% of Weibo (NASDAQ:WB), the Chinese microblogging company. Chinese internet celebrity (better known as "wanghon") accounts at Weibo, and the website's rich multimedia functionalities help make WB a much-loved and somewhat indispensable social media company within China. Furthermore, WB's recent investments in live video streaming and fintech have already started contributing to the bottom line.Many analysts have expressed growth concerns regarding China in the coming quarters. Yet the country's economic fundamentals have vastly improved over the past decade. The internet population is still booming. And money continues to pour into Chinese companies operating in this space, factors that help support BABA stock longer term. What Investors May Expect from Alibaba's EarningsOn May 15, Alibaba reported financial results for the quarter and fiscal year ended March 31, 2019. Its revenue came at $13.9 billion, an increase of 51% year-over-year. On the bottom line, BABA grew adjusted net income by 12%. In fiscal 2020, management expects revenue to top $72 billion, a 33% YOY growth rate.Analysts project Alibaba's Q1 earnings per share to hit $1.13 a share. The firm's full-year fiscal 2020 EPS figure is then expected to be $5.04. Therefore, investors will likely look to see if there are any deviations from these consensus numbers.On Aug. 15, Wall Street will pay attention to BABA stock regarding four segments for revenue numbers: * Core commerce (BABA's largest segment which grew 51% YOY in FY 2019); * Cloud computing (which soared 76% YOY in FY 2019); * Digital media and entertainment * Innovation initiativesAn important metric to pay attention to is Alibaba's operating margin, which stands at 18%. Over the years, BABA's high operating margin has contributed to the profitability of Alibaba stock.Investors will also take a closer look at BABA's declining gross profit margin of 45%. Although it is still a respectable number, it is the lowest gross profit margin in nearly four years.In general, Alibaba's management does not provide any earnings guidance for future quarters. But there is general consensus that BABA's top line can increase at an average annual rate of 20%. That's through both organic growth and acquisitions. That would be an impressive growth rate for a company with a market capitalization of $410 billion. Short-Term Price Decline in BABA Stock Is LikelyEarly investors who have been bullish on BABA stock have been rewarded well, partly thanks to the tremendous revenue growth the group has seen. In Sep. 2014, Alibaba stock started trading on the New York Stock Exchange at an opening price of $92.70.However, the BABA stock price has been quite volatile since early 2018. Currently, it is hovering around $159 and year-to-date, Alibaba shares are up about 15%.Many shareholders are understandably wondering if Alibaba stock may go below $150. Perhaps, it may even drop toward the $130 level to test the lows of Dec. 2018.In August, broader markets have been negatively impacted by the ramping rhetoric of the U.S.-China trade wars. If the two sides cannot reach a deal in the coming days, then BABA stock, like many other Chinese stocks, is likely to suffer further.The options markets are pricing in a post-earnings move of approximately 10% to 13% in either direction. If the earnings report is favorable, my next price target for Alibaba stock in the coming weeks would be between $160 and $175.On the other hand, if earnings guidance disappoints, BABA stock could quickly drop below $150. When one considers the fact that its trailing price-earnings ratio stands at 45 times, many investors would not hesitate to hit the sell button if they fear Alibaba is growing as fast as the share price warrants.In the wake of BABA's earnings, I do not expect Alibaba stock to regain its recent high of $179.88. This level was last seen on July 29. Instead, BABA stock is likely to trade in a range, possibly between $145 and $155, for several weeks.The daily volatility of Alibaba stock is high, giving it a broad trading range. Therefore, short-term traders should proceed with caution. The Bottom Line on Alibaba GroupAlibaba stock offers American investors the chance to invest in the growing Chinese consumer and e-commerce markets. As the company's second decade ends, it is increasingly focusing on becoming a social hub. Alibaba's growth in e-commerce, cloud computing, and its other investments throughout China and globally make it a sound long-term investment.Therefore, patient investors should view any decline in BABA stock as a good buying opportunity.However, traders with a short-term horizon should remember that there might be further declines in Alibaba stock around the release of its earnings.If you already own BABA stock, you might want to hold onto your shares. That said, if you are worried about profit-taking in the short-term, then within the parameters of your portfolio allocation and risk-return profile, you may consider placing a stop-loss at about 3% to 5% below the current price point.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 * 7 Large-Cap Stocks to Sell Right Now * 7 Stocks Under $7 to Invest in Now * 7 Marijuana Stocks With Critical Levels to Watch The post Should Investors Buy Alibaba Stock Ahead of Its Earnings? appeared first on InvestorPlace.
There's no denying Shopify (NYSE:SHOP) has shocked the world. SHOP stock is up more than 165% in 2019, and Shopify stock has rallied an incredible 2000% since its 2015 IPO by doing what many said can't be done. That is, penetrating an e-commerce market dominated by Amazon (NASDAQ:AMZN).Source: Shutterstock SHOP's magic formula has been behind the stratospheric surge of SHOP stock. That formula involves empowering online merchants with tools and information that eBay (NASDAQ: EBAY) and Amazon don't exactly want their sellers to have. The fact that 5,300 companies are using Shopify's products shows that it's got what businesses want. * 7 Large-Cap Stocks to Sell Right Now The enthusiasm of the owners of SHOP stock is understandable.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe huge rally of Shopify stock in just the past few months, though, has left SHOP stock uncomfortably vulnerable to profit-taking and short-selling. Shopify's growth doesn't justify the current valuation of SHOP stock. Shopify Validates the Business ModelFor ages, investors have argued about how far into the future they should look.Amazon is the obvious poster child for an answer along the lines of "many, many years." It was a habitual money loser since its inception in 1994, and didn't start turning consistent profits until 2015. But, now that it's in the black, it's tremendously in the black.Shopify may well be on a similar path.There's a dangerous difference between Amazon then and Shopify now, however. Then, it wasn't entirely clear that e-commerce could ever be profitable. Now, with the industry fully matured, it clearly can be profitable. As a result, many companies with new approaches will enter the sector, while established players like Walmart (NYSE:WMT) are stepping up their game.SHOP, in fact, is one of those newcomers. It's the un-Amazon. It's not even eBay facilitating the establishment of truly independent e-commerce platforms.Others will follow. Shopify Stock Really Does Have a Valuation ProblemThis competition won't be problematic for Shopify stock, though. Indeed, even though Shopify's 10% share of the all-in-one e-commerce platform market is less than that of WooCommerce's and Squarespace, SHOP has arguably already won the battle for mind-share. It should be the market leader, sooner or later.As of the most recent look, however, SHOP stock, with a market cap of $44 billion, is valued as 34 times its trailing 12-month revenue of $1.3 billion. That's not 34 times its earnings, to be clear, which would be considered frothy by most standards. That's 34 times revenueSHOP stock reached that huge valuation even though SHOP wasn't consistently profitable until last year. Based on this year's projected profit of $69 million, SHOP stock is valued at 637 times SHOP's earnings.That's not necessarily the end of the world. Shopify is a work in progress. The market has rewarded less successful names, with less promising prospects.But the point where the current SHOP stock price of $369 will be justified is so far down the road that it can't actually be seen. The 2021 outlook for revenue of $2.7 billion and net income of $218 million still leaves Shopify stock valued at 16.3 times the company's sales and more than 200 times its earnings.On average, stocks are valued at three times companies' revenue, and between 15 and 20 times their earnings.Most people don't realize that the current valuation of Shopify stock isn't justified. It's all based on hype, rooted in the premise that somebody finally figured out how to beat Amazon at its own game. Shopify would have to obliterate its estimates for the next several years to justify the current price of SHOP stock (let alone a higher price) at a time when competitors are improving their own products. The Bottom Line on SHOP StockI'm not suggesting SHOP stock is destined to immediately roll over and lose a big chunk of its value.It's entirely possible -- even likely -- we're at the start of something of a melt-up, as the fear of missing out on continued rallies by Shopify stock pulls more buyers into the incredible rally. Things like fundamentals don't matter until the majority of traders decide they matter, and right now, they don't matter for Shopify stock. A short squeeze may also be in play, artificially pushing the shares higher.Make no mistake though. Every stock always eventually reflects tangible value. Even on a risk-adjusted, potential-adjusted basis, SHOP stock is already in jeopardy.Tread lightly.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 8 Dividend Aristocrat Stocks to Buy Now No Matter What * 7 Stocks to Buy to Ride the Vegan Wave * 4 Safe Stocks to Buy Amid Trade War Turbulence The post Shopify Is Crushing It, But SHOP Stock Is Set to Be Crushed appeared first on InvestorPlace.
There's no point in sugarcoating it, so I won't: without any hesitation, we can all agree that the most recent earnings report for Uber Technologies Inc. (NYSE:UBER) was awful. Not only that, Uber stock took a beating in the afterhours session upon the disclosure, losing more than 6%.Source: Shutterstock Let's take a look at the numbers. Prior to the second-quarter report, analysts forecasted that Uber Technologies Inc would deliver an earnings-per-share loss of $3.19. Instead, the company produced a devastating EPS loss of $4.77. Clearly, that was well off most analysts' expectations. In the regular-hours session prior to the print, the Uber stock price had gained more than 8%.But it wasn't just the red ink that irked investors. Instead, it was the reason for the profitability miss. Primarily, Uber Technologies made several large stock-based transactions following its much-hyped initial public offering. For example, the ride-sharing firm paid $3.9 billion in Uber stock for compensations and expenses in Q2. Additionally, management paid $298 million to drivers using a combination of equity and cash.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 5 Cheap Stocks to Buy Now That the Fed Cut Rates Of course, the company must keep their drivers happy; otherwise, this whole ride-sharing experiment falls apart very quickly. However, we must appreciate the stakeholders' mindset. They want to see earnings reinvested back into the company for sales growth and expansion. Instead, management looks operationally undisciplined, which explains the fallout in the Uber stock price.Unfortunately, the Q2 report doesn't do me any favors either. A few months back and just prior to the Uber IPO, I emphasized my belief that this company, along with rival Lyft (NASDAQ:LYFT) represented transformative investments. Now, my support for Uber stock looks silly. Wall Street's Looking at Uber Stock IncorrectlyAs I mentioned above, I fully realize that the print is ugly. I'm not going to attempt linguistical jiu-jitsu to convince you otherwise. But what I will say is this: most of Wall Street is using the wrong framework when analyzing the Uber stock price.For a better approach, investors should adopt the same mentality with marijuana stocks. The ride-sharing economy has many components similar to the green plant. Both are paradigm-shifting investments in that they have sparked an unprecedented new market. Both suffer legal and administration concerns that eventually will find some solution. And finally, these two markets have tremendous upside potential but will require patience in the here and now.Let me stress the word patience again. Recall that e-commerce powerhouse Amazon (NASDAQ:AMZN) wasn't initially a Wall Street darling. In fact, during its early years following its IPO, Amazon consistently reported bad losses.Further, imagine what critics said during that period. E-commerce? Random people selling goods to perfect strangers? That would never work in a million years!Except that it did work, and it only took a couple of years. Although we have hindsight's perfect vision, you didn't have to be a futurist to see the writing on the wall. Even back in the 1990s, it was clear through companies like eBay (NASDAQ:EBAY) that the internet would transform commerce.And I'm telling you that Uber Technologies Inc is the Amazon of the 1990s, or Apple (NASDAQ:AAPL) circa the 1980s. You'll probably have to suffer through some quirks and ugly earnings reports. But the on-demand sharing economy will disrupt and replace traditional services. Therefore, the panic toward the Uber stock price is unnecessary.But since human nature is what it is, use this as a buying opportunity in Uber stock. Q2 Produced Outstanding NumbersAnother reason why I'm very confident about the longer-term trajectory of the Uber stock price is the fundamental mismatch. More specifically, shares went down sharply when the Q2 report produced some tremendously positive results.Let the bears focus on the earnings print all they want. I'm going to look at an incredibly viable component of the company's business, Uber Eats. For those that don't know, this is Uber's food-delivery service. It is quick, convenient, and reasonably priced (relatively speaking). Uber Eats was the first time outside of ordering pizza that I used a food-delivery service. Certainly, it won't be the last.The beauty here is that my anecdotal story has quantifiable validity. According to the Q2 report, Uber Eats' user base jumped 140% from the year-ago quarter. In addition, 40% of Uber Eats customers had never used the Uber platform before.I want you to think about that. As an investment, Uber taps into two relevant revenue channels: ride sharing and on-demand food deliveries. Furthermore, each sub-segment evangelizes the benefits of the other. Frankly, I can't think of another mass-scale service-based company that levers this attribute.In closing then, maybe the markets should panic and drive the Uber stock price lower. That just gives me an opportunity to pick some up on the cheap.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Internet Stocks Getting Hammered * 6 Big Growth ETFs to Buy For the Second Half of 2019 * 5 Cheap Stocks to Buy Now That the Fed Cut Rates The post Iam More Interested in Buying Uber Stock Than Ever Before appeared first on InvestorPlace.