Author Topic: SHOP - Shopify  (Read 31492 times)

valueinvestor

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Re: SHOP - Shopify
« Reply #150 on: May 26, 2020, 07:33:46 AM »
Down 8%


valueinvestor

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Re: SHOP - Shopify
« Reply #151 on: May 27, 2020, 07:18:09 PM »
Down about 20% for the last two days, not sure if it went back up again, but could be a buying opportunity or a possible break of Shopify's multi-year rally.

KJP

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Re: SHOP - Shopify
« Reply #152 on: May 28, 2020, 05:27:23 AM »
Few developments that stopped me from trimming position and even adding when it went down 4%.

Facebook shop is run on the Shopify platform. Facebook will not receive any fees transaction fees or management fees, as Facebook will rely on the ad spend for the shop platform.


Here's one person's view that Facebook Shop could be a problem for Shopify:  https://stratechery.com/2020/platforms-in-an-aggregator-world/

Key paragraphs:

Shopify’s original business model is labeled “Subscription Solutions”; merchants pay a subscription fee to use the Shopify platform — the price ranges from $29 to $299 per month — and can use the payment provider of their choice. When Shopify IPO’d Subscription Solutions was 60% of their $67 million in quarterly revenue.

Over the last five years, though, “Merchant Solutions” — which are a percentage of transactions, usually from using Shopify Payments — has been the primary growth driver. Last quarter it was Merchant Solutions that was 60% of Shopify’s $470 million in quarterly revenue.

This shift in Shopify’s business model is almost certainly why the company appears to be uncomfortable with this evolution of their “partnership” with Facebook. Sure, Facebook Shop integration will be a feature of Shopify’s Subscription Solutions, but Shopify will be locked out of sales made via Facebook Checkout, which means no Merchant Solutions revenue, and by extension, no participating in the upside of its merchants’ growth.


valueinvestor

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Re: SHOP - Shopify
« Reply #153 on: May 28, 2020, 06:58:09 AM »
Few developments that stopped me from trimming position and even adding when it went down 4%.

Facebook shop is run on the Shopify platform. Facebook will not receive any fees transaction fees or management fees, as Facebook will rely on the ad spend for the shop platform.


Here's one person's view that Facebook Shop could be a problem for Shopify:  https://stratechery.com/2020/platforms-in-an-aggregator-world/

Key paragraphs:

Shopify’s original business model is labeled “Subscription Solutions”; merchants pay a subscription fee to use the Shopify platform — the price ranges from $29 to $299 per month — and can use the payment provider of their choice. When Shopify IPO’d Subscription Solutions was 60% of their $67 million in quarterly revenue.

Over the last five years, though, “Merchant Solutions” — which are a percentage of transactions, usually from using Shopify Payments — has been the primary growth driver. Last quarter it was Merchant Solutions that was 60% of Shopify’s $470 million in quarterly revenue.

This shift in Shopify’s business model is almost certainly why the company appears to be uncomfortable with this evolution of their “partnership” with Facebook. Sure, Facebook Shop integration will be a feature of Shopify’s Subscription Solutions, but Shopify will be locked out of sales made via Facebook Checkout, which means no Merchant Solutions revenue, and by extension, no participating in the upside of its merchants’ growth.

Thanks for this! I was under the impression Facebook would not be entitled to any of the merchant fees, but looks like I'm wrong! Although it does not change the overall thesis, since Facebook Shop is a bonus and not the core.

valueinvestor

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Re: SHOP - Shopify
« Reply #154 on: June 15, 2020, 09:59:31 AM »

Liberty

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Re: SHOP - Shopify
« Reply #155 on: July 29, 2020, 08:36:56 AM »

valueinvestor

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Re: SHOP - Shopify
« Reply #156 on: July 29, 2020, 11:56:50 AM »
Pretty insane numbers:

https://news.shopify.com/shopify-announces-second-quarter-2020-financial-results

Thanks! Didn't know they announced, thought they were going to next month for some reason.But yeah crazy numbers, but I think the even insane numbers are not out yet.

fareastwarriors

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Re: SHOP - Shopify
« Reply #157 on: July 29, 2020, 11:58:59 AM »
Pretty insane numbers:

https://news.shopify.com/shopify-announces-second-quarter-2020-financial-results

Thanks! Didn't know they announced, thought they were going to next month for some reason.But yeah crazy numbers, but I think the even insane numbers are not out yet.

What do you mean?

valueinvestor

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Re: SHOP - Shopify
« Reply #158 on: July 29, 2020, 12:25:39 PM »
The company is changing quarter-by-quarter, and therefore when forecasting one has to take account the value ladder and flywheel effect that a Shopify customer goes through when hopping on their platform.
 
For example -

Shopify customer comes on to the platform ----> they grow ----> they start purchasing other services from Shopify/Shopify Apps, even though it's more expensive then competitors, it's easier to integrate and therefore more valuable ----> they start upgrading their subscription plan ----> eventually become shopify plus ----> and also possibly eligible for Shopify Shipping.

On the other hand, Shopify has more data, where they can refine services such as Shopify Capital, where they can  make loans based on a data-driven underwriting process.

If one goes through past financials and used their services (while using the competiton's services), they'll realize that even though revenues was growing at a fast pace, the value provided to shopify customers grew way faster. Even during the years where Shopify declined due to the short report and slowing revenue growth, many people didn't realize that they weren't focus on Revenue but rather Value. This is more important in my book, and the number of users they were able to on-board, while obtaining a wider talent pool due to the US - makes me think that the platform became even more valuable. However to the credit of other posters, it's hard to quantify the above and reach a fair valuation. 


jschembs

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Re: SHOP - Shopify
« Reply #159 on: July 29, 2020, 02:00:15 PM »
Just flipped through the Q2 presentation. Their discussion of financials ends at 'adjusted' gross profit.

I can't imagine a more perfect storm for e-commerce businesses relative to other sectors than Q2 2020 / COVID. I know "investing for growth," but you'd think there might be a little more discussion about cash flow and profits...