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TSX Stock: Shopify-like

Published on: June 4 2023 by pipiads

Shopify, the Canadian e-commerce giant, has experienced a significant decline in share value year to date, with a 72% drop. In this article, we will answer a listener's question on whether Shopify represents good value at its current price and whether it is likely to recover.

Is Shopify likely to recover?

It is difficult to say whether Shopify will recover, as it depends on what happens with the market. However, as of now, Shopify does not represent good value at its current price.

What is Shopify?

Shopify is an e-commerce business that provides an e-commerce platform to small and medium-sized businesses. They have millions of customers throughout the world and are currently valued at $65 billion.

Why has Shopify's share value declined?

Shopify is suffering from the same issues that many technology companies are facing in North America, particularly in the United States. Valuations for high-growth industries like e-commerce were up to unreal levels, with companies trading at upwards of 100 times sales. As a result, many of these companies, including Shopify, are down 85-95%.

What are the financials of Shopify?

Shopify recently reported its Q3 2020 financial results, with revenue up about 22% for the quarter. While this is a strong growth rate, it is the second-lowest growth rate that the company has reported in its history as a public company, and the growth rate has been trending down. The company is also continuing to lose a lot of money and is not anywhere close to profitability. Adjusted operating income for the first nine months of 2020 was negative $633 million, burning through almost $400 million in cash flow.

While Shopify is an interesting platform and technology, the company still has a lot to prove. Without evidence of profitability and cash flow, we do not recommend buying Shopify right now. There are far better stocks in the technology space in the SaaS and software space that represent far better value and are actually producing profitability and cash flow.

Shopify Stock Will Make Millionaires | SHOP Stock Explained

- Discussing the oversold nature of Shopify stock

- Despite low valuations, the company maintains strong fundamentals

- Exploring why the author recently bought shares in the company

Shopify:

- Enabling small and large businesses to engage in e-commerce

- Competing with Amazon by allowing individuals to create their own online stores

- Providing shipping services and other support

- Rapidly growing e-commerce space

- Impressive revenue growth despite recession

Stock Performance:

- Shopify's stock price has fallen dramatically over the past year

- Comparing potential gains if stock returns to previous levels

Market Cap:

- Despite low stock prices, Shopify has substantial cash reserves

- Market cap may be underestimated due to cash holdings

Concerns:

- Shopify's growth trajectory has slowed down

- The company is overly aggressive in the e-commerce space

- Fed's interest rate hikes and recession have negatively impacted stock price

Future Outlook:

- Predicting potential gains if economy improves and company continues growth

- Discussing high P/E ratio and profitability

- Personal opinion on buying Shopify stock

- Encouraging viewers to join a free private stock group

- Emphasizing long-term investment approach.

Shopify Stock (SHOP) Will Make Millionnaires - Is Shopify Stock A BUY?

- Less than 70% is the return year-to-date of one of the largest companies in the world, Shopify, with a big discount. Is it a good time to buy or just the beginning of a shipwreck?

Business Model:

- Shopify is an e-commerce platform that helps small businesses create and build their own online store.

- The platform can be used by businesses of all sizes, whether they sell online or in retail.

- The company generates its income through subscription plans, with three main plans ranging from $7 to $299 per month.

- Since its inception in 2006, Shopify has grown from a small company with five employees to over 10,000 employees worldwide, helping over 1.75 million businesses create and customize their own online store.

Valuation:

- Shopify is currently worth about $53 billion, with a high price to earnings ratio of over 245, indicating that the stock is overvalued.

- The company is not making a lot of money, with negative net income and negative cash flow from operations.

- However, the company's revenue has been growing, with a 20% year-over-year growth in the last quarter, and it sits on a lot of cash, about $5 billion compared to $1.3 billion of debt.

- The risk represented by the beta is super high, about 1.88, making the stock almost two times more volatile compared to the average market.

Analysis:

- Shopify has lost momentum in the last couple of months and is considered an overvalued stock based on different fundamental analysis and evaluation metrics.

- However, if one takes a long-term point of view and wants to invest in a company that is a leader in the e-commerce sector, Shopify could be a great pick.

- With people starting to buy more and more online, Shopify could be a way to go in that field, even though the stock is down more than 70% since the beginning of the year.

- Shopify is an intriguing and interesting company that has lost momentum in the last couple of months, but it could be a great long-term investment for those who want to invest in the e-commerce sector.

- The stock is currently overvalued based on different fundamental analysis and evaluation metrics, but it could still be a great pick for the future.

BEST Canadian Growth Stocks | 5 Growth Stocks Under $5

- Cameron, from Common Sense Investing Canada, shares the best Canadian penny stocks with no bias.

Numbered List:

1. H2O Innovations:

- Water treatment stock with great potential in the current climate change scenario.

- Slowly increasing earnings every year.

2. NexTech AR:

- Online shopping 3D modeling technology.

- Higher click-through rates, conversions, and lower product returns.

- Overvalued, but potential technology of the future.

3. Kraken Robotics:

- Specializes in unmanned underwater vehicles (UUVs).

- Potential in offshore energy, climate change studies, and navy upgrades.

- Doubled share price since the first video on it.

4. Well Health Technologies:

- Niche in post-surgery care in the healthcare industry.

- Extremely profitable and has been pumped by the Motley Fool.

5. ESE Entertainment:

- Specializes in Esports, professional-level video gaming.

- Potential in a new and young investor base.

6. Current Water Technologies:

- Highest risk, highest reward penny stock.

- Has two major patents, one for making green hydrogen from wastewater and the other for treating live seafood transport water using electricity.

- Cameron looks for small growth companies with good financial fundamentals and amazing technologies.

- He makes two to three videos a week on different Canadian and American penny stocks.

Is It Time To Buy Shopify Stock? Shop Stock Price

Welcome back to another episode! Yesterday, I discussed three reasons to be bearish on Shopify. As a shareholder of Shopify, I believe it's important to also understand the bullish side of an investment thesis. In today's episode, I'll go through three reasons to be bullish on this e-commerce giant.

Shopify has recently set new Black Friday-Cyber Monday records with $7.5 billion in sales, a 19% year-over-year increase in sales. This e-commerce company is dependent on transactions, so more transactions mean better results. Shopify has a strong balance sheet and is innovating in various areas. Additionally, e-commerce sales worldwide are expected to continue to grow.

Reasons to be bullish on Shopify:

1. Strong balance sheet:

- The company reported $4.9 billion in cash and short-term investments.

- Total long-term debt is around $900 million.

- The company is cutting back on expenses dramatically, reducing stock-based compensation from $750 million to $575 million and capital expenditures from $200 million to $125 million.

- Overall, the company's financial balance sheet is stable.

2. Innovation:

- In the past year, Shopify has increased its solutions to reach new buyers and traffic efficiently.

- They've added new ad tech solutions and increased their supply chain complexity.

- Shopify has recently acquired the Livery and introduced Shopify Promise, which is combating Amazon's one to two-day delivery.

- The company is improving its Shopify fulfillment network and expanding internationally.

- Shopify has expanded its solutions to numerous companies like Walmart, Facebook Shops, TikTok, Alipay, Spotify, and JD.com.

- They're also going offline with solutions like Shopify Point of Sale and Shop Pay.

- Overall, Shopify is a one-stop-shop for e-commerce and brick and mortar businesses.

3. Growing e-commerce market:

- E-commerce sales worldwide are expected to continue to grow for the next few years.

- Even if Shopify doesn't gain market share, the overall market is growing.

- Shopify's integrations with platforms like YouTube, TikTok, and Facebook make them the leader in the e-commerce space.

Shopify is a strong investment choice with a stable balance sheet, innovative solutions, and a growing e-commerce market. The company is expanding its solutions to numerous companies and is a one-stop-shop for e-commerce and brick and mortar businesses. Even with competition coming in, Shopify is expected to be the leader in the e-commerce space for the foreseeable future.

Shopify Store VS Stock Market/CRYPTO

Why Investing in Big Companies May Not Be the Best Option

Investing in big companies may not always be the best option, especially if you have a limited amount of money. Instead, it may be more beneficial to invest in something long term, such as a Shopify store or a brand.

Why You Shouldn't Invest in Single Stocks:

- If you have less than half a million dollars, investing in a single stock may not be the best option.

- Even if you invest $1,000 in a stock like Tesla and it goes up by 100, it may take years for you to see a return on your investment.

- Investing in a stock means you are putting your money in someone else's hands, and they may not care about your investment as much as you do.

Why Investing in a Shopify Store May Be Better:

- Investing in a Shopify store or a brand may be more beneficial as it is a long-term investment.

- You can invest less than $200 to validate a product and get some traction.

- Starting an online store is a growing market as more people prefer to shop online.

- When you invest in your own brand, you are betting on yourself and have more control over your investment.

Investing in big companies may seem like a good idea, but it may not be the best option for everyone. Instead, investing in something long term, such as a Shopify store or a brand, may be more beneficial and provide more control over your investment. It may take some time and effort to find the right product, but it only takes one successful investment to make a significant impact. So, don't give up and bet on yourself.

Is Now the Time to Buy Shopify Stock?

Shopify, a company listed on both the NYSE and TSX, is known for being one of the fastest-growing tech stocks. However, in the past six months, Shopify has lost 53% of its TSX value and 45% of its NYSC value. This has left investors wondering if they should become shareholders or sit this one out.

Market Comparison:

The Dow Jones has risen 2.3% in the past six months, which is not great, but it's nowhere near as bad as Shopify. Walmart shares have lost 1.9%, and Amazon has lost 3.9% in the same time frame. However, Shopify has been hit way harder than the rest.

Reason for Shopify's Poor Performance:

Shopify's product peaked during heavy COVID restrictions as brands and sole proprietorships turned to Shopify to keep up with an evolving market. As COVID restrictions began to lessen, the hype and demand for Shopify seemingly lessened as well. Shopify also reported poor earnings in October 2021, which was a 28% loss from the same time last year.

Earnings Reports:

Shopify saw a stock climb for around two weeks after reporting poor earnings in October 2021. Moving forward to the next earnings report on February 15th, 2022, Shopify beat estimates and posted a 1.36 EPS over the forecasted 1.30. However, it was still down 14% from the same time last year.

Price-Earnings Ratio:

One of the biggest problems for Shopify is their price-earnings ratio. In the minds of many, Shopify was and still may be too overvalued if you consider this ratio. While the stock initially grew quickly and saw great success, long-term investors may see this as a cause for concern.

Future Outlook:

In order for Shopify to see long-term success, it will have to maintain its rate of growth and continue to expand its reach in the e-commerce market. With continued uncertainty in the market and Shopify's unclear direction, most traders would need to see the start of a true bull market before they invest in Shopify. However, there is still great potential in Shopify as markets begin to settle.

Shopify has had a rough past six months, but with the return of oversold tech stocks, it has risen 23% in the past week. While there is no guarantee of success, there is still great potential in Shopify if it can maintain its rate of growth and continue to expand its reach in the e-commerce market.

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