Headquartered in Ottawa, Canada, Shopify is an eCommerce multinational company that operates a cloud-based platform designed to help businesses sell their products online effectively. With a stated mission of ‘making commerce better for everyone,’ Shopify provides best-in-class tools, software, and services to assist merchants to start, run and grow their businesses, both online and offline. The company operates via two core business segments: subscription solutions and merchant solutions. Shopify was founded in 2004 by Tobias Lutke, Scott Lake, and Daniel Weinand.
Shopify has quickly risen to become the platform of choice for merchants that want to quickly set up an eCommerce presence in a cost-effective manner. The company currently supports over 1.7 million merchants around the world, with annual gross merchandise volumes in excess of $50 billion. Shopify has pioneered, shaped, and grown with the global eCommerce industry. Its success has been fuelled by both organic and inorganic growth. The company has notably pursued a targeted acquisitions strategy that has seen it buy impressive companies throughout its history, such as Tiny Hearts, Oberlo, Primer, Dovetale, 6 River Systems, and Tictail. Shopify has also made strategic partnerships to integrate Shopify into major platforms such as Amazon, Facebook, Google, and Walmart. But while important collaborations have always propelled Shopify, the company has also never shied away from evolving and adapting its platform to serve its customers better. Recently, the company made its platform attractive for app and theme developers by eliminating the revenue-sharing component. Shopify has also announced that it will start offering NFTs, loans for small businesses, merchant money management accounts, as well as a fully hosted enterprise eCommerce platform. Shopify has witnessed immense growth in recent years as online shopping continues to increase, particularly during and after the coronavirus pandemic. The trend is expected to continue, and Shopify is well placed to reap big.
Shopify went public in May 2015, listing on the NYSE under the ticker symbol SHOP. The stock is categorized in the Technology sector, under the Software-Application industry. Shopify is also cross-listed on the Toronto Stock Exchange.
Shopify Stock History
Shopify stock debuted on the NYSE at $28, a price that was much higher than the initial IPO price of $17. The Shopify share price stagnated for a while before embarking on a steady upward trajectory in 2017 as it climbed above $100. It would again climb above $200 in 2019, kick-starting a sharp rally that was overextended in 2020 as the population worldwide was kept indoors due to the coronavirus pandemic and online shopping exploded. The sharp rally continued into 2021, and SHOP managed to print an all-time high above $1690.
After those heights, the SHOP stock entered a period of correction that was made worse by a broader sell-off in tech stocks and a cooling pace of online shopping as governments relaxed lockdown restrictions around the world. The stock has tumbled sharply and currently trades around the $450-area as of April 2022. Shopify has already announced plans for a 10-for-1 stock split. In Shopify’s case, a split can help prevent massive selloffs as well as make the stock available to a broad range of investors.
When it comes to the Shopify dividend per share, Shopify has never paid any dividends to its shareholders. SHOP is classified as a growth stock, and investors hope that it will generate massive capital gains via higher valuations in the future.
How to Trade Shopify Stock
Here are some of the factors to consider when trading SHOP stock:
- Regulatory and Legislative Issues
As a company that helps retail business owners to move and stay online, Shopify has to deal with diverse regulatory and legislative issues. Some of the issues include privacy and data protection, liability and contractual information, as well as secure electronic payments and fraud protection. As a global business, regulatory and legislative changes in the different jurisdictions Shopify operates in may impact its bottom line.
As more and more businesses migrate online, the industry is becoming fiercely competitive for Shopify, in all its operating segments. In the software space, the company competes with well-known players such as WooCommerce, Oracle, Wix, and Squarespace; whereas, in the fulfilment area, it has to square it up with the likes of Amazon and UPS. There is also the threat of new entrants, with massive companies such as Google and PayPal likely to join the competition in the future and further add competitive pressures to Shopify.
- Underlying Economic Conditions
Growth stocks, such as Shopify, are very sensitive to underlying economic conditions. Shopify is even more sensitive because its primary customers are small and medium businesses. SMEs are by nature very volatile, and this reflects in Shopify’s stock. The company’s stock notably soared during the COVID-19-triggered lockdowns but tumbled heavily as normalcy resumed. SMEs typically have a short life, and they are impacted the most in both periods of expansion and contraction. Thus, Shopify stock is very vulnerable to underlying economic conditions.
- Periodic Earnings Reports
The Shopify fiscal year mirrors the calendar. The company releases quarterly, semi-annual and annual reports to update its shareholders on the state of its business. Some of the metrics Shopify investors look for include revenue growth, monthly recurring revenue, as well as sales and marketing expenses. Good numbers can push the Shopify share price higher, whereas bad figures can pressure it lower.
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