Author Topic: SHOP - Shopify  (Read 25753 times)

Spekulatius

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Re: SHOP - Shopify
« Reply #40 on: January 13, 2020, 03:20:38 PM »
the same analogy can be said about AMZN 10 years ago vs Berkshire 10 years ago - but clearly for the last 10 years AMZN has been a better investment.
gary

So this is the next Amazon?

AMZN 10 years ago didnít trade at the valuation that SHOP is trading now.
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gary17

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Re: SHOP - Shopify
« Reply #41 on: January 13, 2020, 03:59:57 PM »
the same analogy can be said about AMZN 10 years ago vs Berkshire 10 years ago - but clearly for the last 10 years AMZN has been a better investment.
gary

So this is the next Amazon?

AMZN 10 years ago didnít trade at the valuation that SHOP is trading now.

i am by no means suggesting SHOP's valuation makes sense
but two things that are diff than 10 years ago:
1) the e commerce platform is much more developed today (IG, FB, etc)
2) interest rates are higher 10 years ago.
it's hard to do an apples to apples comparison...
Gary

Liberty

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Re: SHOP - Shopify
« Reply #42 on: January 13, 2020, 05:15:44 PM »
AMZN 10 years ago didnít trade at the valuation that SHOP is trading now.

It was also a completely different business with different end-state economics (the retail part, AWS at the time was nothing). But definitely some of the same dynamics (investments in growth and underpricing to accelerate growth masking true earning power).
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valueinvestor

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Re: SHOP - Shopify
« Reply #43 on: April 20, 2020, 08:09:55 PM »
For many years I've been interested in "optically" expensive and messy un-modelable stocks because they are the largest basket of stocks that came up year-after-year consistent outperformance.

Looking at Shopify many may believe the run-up from April 2 to now is unbelievable, but with the coronavirus, I think this stock is more compelling (dare I say - undervalued).

The "aha moment" is when I spoke to people/businesses with e-commerce websites and created e-commerce websites myself, Shopify is the Google of e-commerce builders versus the bings of the world. There are many instances where businesses tried to move away from Shopify but end up going back to them - hence there's also huge pricing power with their products.

Would this be a bet-the-farm type of situation? No... but I feel like my grandchildren will scoff at me not investing.

After the run-up, I haven't sold and in fact, bought more (not huge since it is a big part of my portfolio).

However, the way I look at this is a company with very stable economics with hidden assets, such as their app store, AR, Shopify Capital, e-commerce business sale page, and much more.

To justify it at today's valuation - in ten years it has to do about $100B in revenues, which I believe it can if it issues stocks at highs and invest in long run-way projects that could be huge winners.

K2SO

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Re: SHOP - Shopify
« Reply #44 on: April 22, 2020, 08:43:39 AM »
To justify it at today's valuation - in ten years it has to do about $100B in revenues, which I believe it can if it issues stocks at highs and invest in long run-way projects that could be huge winners.

It's a great company, no doubt.

But 10 years is a long time to wait to justify today's valuation. What's your discount rate?

Orange

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Re: SHOP - Shopify
« Reply #45 on: April 22, 2020, 11:20:38 AM »
I don't comment in this forum normally, but as someone who has ran an ecommerce business full time for the last 3 years, reading this thread full of investors who clearly don't have a deep understanding of the ecommerce game, is particularly illuminating.

 It gives me a better perspective of how Mr. Market can get things wrong for long periods of time. Shopify is going to make $100B in revenue in ten years apparently. According to a "valueinvestor." Just... wow.


The most important thing is really- Shopify sells a tool. It's a nice tool, they do a good job of marketing that tool, it's a well known quality tool. But it's just a tool. The engine to any ecommerce business is web traffic, or customers. Cost of customer acquisition makes or breaks you.

Shopify provides no way to gain attention, they have no retail customers. Speaking on behalf of ecommerce store owners, we are slaves to the platforms where the customers hangout. Slave to Facebook, slave to Instagram, slave to Pinterest, slave to Google, super-slave to Amazon. I sell on Amazon, if I wanted to switch to another platform, I would have to entirely rebuild my marketing strategy and core business model. THAT is what high switching costs look like. THOSE businesses are truly valuable, and deserve rich valuations.

Shopify does not have truly high switching costs for us ecommerce sellers. They really do not have as much pricing power as investors think, and a large % of their customer base is relying on supply chains that have been permanently disrupted due to Covid. This is a dangerous time to invest in this company IMO, unless the purpose is pure speculation over the short term.

« Last Edit: April 22, 2020, 11:23:08 AM by Orange »

arcube

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Re: SHOP - Shopify
« Reply #46 on: April 22, 2020, 12:31:59 PM »
I don't comment in this forum normally, but as someone who has ran an ecommerce business full time for the last 3 years, reading this thread full of investors who clearly don't have a deep understanding of the ecommerce game, is particularly illuminating.

 It gives me a better perspective of how Mr. Market can get things wrong for long periods of time. Shopify is going to make $100B in revenue in ten years apparently. According to a "valueinvestor." Just... wow.


The most important thing is really- Shopify sells a tool. It's a nice tool, they do a good job of marketing that tool, it's a well known quality tool. But it's just a tool. The engine to any ecommerce business is web traffic, or customers. Cost of customer acquisition makes or breaks you.

Shopify provides no way to gain attention, they have no retail customers. Speaking on behalf of ecommerce store owners, we are slaves to the platforms where the customers hangout. Slave to Facebook, slave to Instagram, slave to Pinterest, slave to Google, super-slave to Amazon. I sell on Amazon, if I wanted to switch to another platform, I would have to entirely rebuild my marketing strategy and core business model. THAT is what high switching costs look like. THOSE businesses are truly valuable, and deserve rich valuations.

Shopify does not have truly high switching costs for us ecommerce sellers. They really do not have as much pricing power as investors think, and a large % of their customer base is relying on supply chains that have been permanently disrupted due to Covid. This is a dangerous time to invest in this company IMO, unless the purpose is pure speculation over the short term.

+1. Shopify is now the 2nd largest company in Canada by market cap, passing TD Bank today -- behind only the Royal Bank of Canada.

I believe the attached is driving the current momentum. Not sure how long this will last.


rb

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Re: SHOP - Shopify
« Reply #47 on: April 22, 2020, 01:00:03 PM »
+1. Shopify is now the 2nd largest company in Canada by market cap, passing TD Bank today -- behind only the Royal Bank of Canada.

I believe the attached is driving the current momentum. Not sure how long this will last.
Ouch! History is hasn't been kind to Canadian companies that shot to the top of market cap list and weren't a bank.

matts

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Re: SHOP - Shopify
« Reply #48 on: April 22, 2020, 01:07:21 PM »
I don't comment in this forum normally, but as someone who has ran an ecommerce business full time for the last 3 years, reading this thread full of investors who clearly don't have a deep understanding of the ecommerce game, is particularly illuminating.

 It gives me a better perspective of how Mr. Market can get things wrong for long periods of time. Shopify is going to make $100B in revenue in ten years apparently. According to a "valueinvestor." Just... wow.


The most important thing is really- Shopify sells a tool. It's a nice tool, they do a good job of marketing that tool, it's a well known quality tool. But it's just a tool. The engine to any ecommerce business is web traffic, or customers. Cost of customer acquisition makes or breaks you.

Shopify provides no way to gain attention, they have no retail customers. Speaking on behalf of ecommerce store owners, we are slaves to the platforms where the customers hangout. Slave to Facebook, slave to Instagram, slave to Pinterest, slave to Google, super-slave to Amazon. I sell on Amazon, if I wanted to switch to another platform, I would have to entirely rebuild my marketing strategy and core business model. THAT is what high switching costs look like. THOSE businesses are truly valuable, and deserve rich valuations.

Shopify does not have truly high switching costs for us ecommerce sellers. They really do not have as much pricing power as investors think, and a large % of their customer base is relying on supply chains that have been permanently disrupted due to Covid. This is a dangerous time to invest in this company IMO, unless the purpose is pure speculation over the short term.

Thank you. This is the kind of first-hand expertise we need more on the forum. I hope you post more often going forward.

KCLarkin

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Re: SHOP - Shopify
« Reply #49 on: April 22, 2020, 01:15:10 PM »
If you are a seller who relies on Amazon or Google, you have a job not a business.

Disclosure: No position. I question the economics of the business but they meet an important need and do it very well.