🛍️ Shopify: Will the winning streak last?

Warren adds more to his Buffet. Ford continues EV push.

Feb 18, 2021

Hey Global Investor, here's what you need to know before the US markets open.

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Shopify: Will the winning streak last ?

2020 was a blockbuster year for Shopify, with online retail sales doubling three quarters in a row. Its shares have almost tripled in value in the past year, vaulting the Canadian company’s valuation to $180B.

Background: The pandemic has forced retailers in general to rethink their social as well as online strategy. The network effect was clear - more customers shopping online than ever, and more retailers selling online to cater to these shoppers. As the platform that is enabling merchants to sell their wares online, Shopify was the direct beneficiary of this trend.

Some relevant Q4 statistics:

Gross merchandise value (GMV) doubled to $41.1B
52% of the retailers used Shopify Shipping (16% growth Y-o-Y)
Cash holdings grew 160% to $6.39B Y-o-Y
Shop, the mobile shopping assistant launched last year, registered 19M+ monthly active users.

Shopify’s product innovations (Shop Pay, Shopify Plus, Shopify POS, Shopify Network & Shop) have propelled the company’s adoption on retailers and consumers. Partnerships with Walmart (WMT) and TikTok are paving the way for broader expansion plans in 2021.

What is Happening?: The company is partnering with Facebook by integrating Shop Pay into Facebook and Instagram. Another such integration is planned with Affirm (AFRM), enabling merchants to offer the BNPL (Buy now Pay Later) option to their customers.

All said and done; investors are focused on whether Shopify’s stratospheric growth in 2020 can be sustained in the post-pandemic world. Shopify amplified those concerns by declining to provide guidance for the next quarter and year, citing the possibility that people may prefer to step into stores for shopping as the vaccine takes effect.

Amazon is the elephant in the room with its recent secret acquisition of Selz, an Australian e-commerce platform that also helps small businesses create their own virtual stores, similar to Shopify. With Amazon’s war chest getting ready to provide these tools to small and medium-sized businesses, will Shopify be the proverbial unstable building in a tornado or the stable bunker that withstands the onslaught? Only time will tell.

Market Reaction: SHOP closed the day at $1,425.00, down 3.32%. The stock is down 1.08% in pre-market trading.

Company Snapshot 📈

SHOP $1,425.00 − 49.00 (3.32%)

Analyst Rating (34 Ratings) Buy 44% Hold 47% Sell 9%

Newsworthy 📰

Buying spree: Warren Buffett's Berkshire Reveals Three New Secret Buys (CVX +3.00%, VZ +5.24%, MMC +2.78%)
Banking: MasterCard (MA −1.14%) launches first central bank digital currency.
Vroom!: Ford to spend $1 billion on electric car factory in Germany. (F -0.52%)

Later Today 🕒

Before Market Open: Emerald Holding Inc |(EEX)
Before Market Open: ViacomCBS Inc (VIACA)
After Market Close: Dropbox Inc (DBX)
After Market Close: Roku Inc (ROKU)
7:00 PM IST: Retail sales
7:45 PM IST: Industrial production

Fun Fact of The Day 🌞

Greenland sharks can live up to 500 years!

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