Technology Stocks : Shopify Inc (SHOP: NASDAQ) SHOP.TO
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From: IceHawk9/11/2017 9:12:37 PM
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Shopify Stock Hits New High: What Investors Need to Know

Benjamin Rains Zacks September 11, 2017

Shares of Shopify (SHOP) surged to a new all-time on Monday. But with no breaking news to speak of, it might be time to take a look at what exactly the young Canadian company does that has investors hopping on board.

Shares of Shopify SHOP surged to a new all-time on Monday. But with no breaking news to speak of, it might be time to take a look at what exactly the young Canadian company does that has investors hopping on board.

Shopify has been able to fly under the radar as a growing e-commerce power, with a market cap of over $11.6 billion, because its presence and growing ubiquity is not easily known to online shoppers. In early August, Shopify announced that its cloud-based platform now helps run e-commerce sites for over 500,000 merchants.

The Ottawa, Ontario-headquartered firm, which began as a company that sold snowboard equipment online, now helps small and medium-size businesses start and run a sales-based website without any coding or technical computer skills.

The company’s 2016 revenues jumped over 100% year-over-year to $390 million, and Shopify reported $151.7 million in second-quarter sales in 2017, which marked a 75% increase.

The e-commerce company now projects full-year 2017 revenues in the range of $642 million to $648 million. Shopify also narrowed its GAAP operating loss guidance to between $62 million and $66 million.

So What Is Shopify Doing?

Shopify recently partnered with online entertainment and news outlet giant BuzzFeed. The new channel allows Shopify companies and merchants to gain easy exposure on BuzzFeed.

The idea is to give BuzzFeed editors the ability to easily search for companies or products that they then can produce content about, in order to help the e-commerce merchants boost sales. Shopify’s clients simply pay a commission to BuzzFeed if it is determined that a sale was made based on a post.

Furthermore, Visa V, Frito-Lay PEP, Canadian Tire CTC.A, and theNew York Times all launched stores on Shopify last quarter. Big-time celebrities who are extremely popular among Millennials—including Drake, Kanye West, and Kylie Jenner—all use Shopify to sell products.

The company also recently introduced its first in-house designed hardware. Shopify merchants that have a brick-and-mortar store, or sell products at physical locations, can purchase the company’s new credit card processor called the “Chip & Swipe Reader.” The hope is to give merchants the ability to adapt in the ever-changing retail environment by offering this essential piece of fintech.

On top of that, Shopify now offers clients more robust data about everything from users to financials. Merchants are able to view a plethora of sales and customer data, for both online and in-person sales, in one online dashboard.

The platform can help small businesses answer big questions, such as where their website traffic is coming from, top performing sales days and products, and more. Shopify’s hope is to give its customers the ability to take action based on a variety of metrics.

Bottom Line

Shopify makes e-commerce easier for small and medium size businesses, at a time when online shopping and searching has become almost paramount to success. Similar to WordPress, which reportedly helps power almost 25% of websites on the internet, Shopify allows users to pick from an array of design templates and 1,800 apps to set up a relatively easy to use e-commerce site.

Shopify now boasts that its merchants have sold more than $40 billion worth of products using its platforms. And barring an unforeseen pivot, e-commerce sales will only continue to grow.

Shares of Shopify skyrocketed from $41.63 a share a year ago to hit a new all-time high of $118.60 a share on Monday.

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