Shopify Inc is a Canadian multi-channel commerce platform that is designed for small and medium-sized companies. The company’s headquarters is located in Ottawa, Ontario, founded by Tobias Lütke and Scott Lake in 2006. This cloud-based platform for online stores and retail point of sale systems. Businesses can sell and manage their products and inventory, process payments, leverage their analytics, and so much more. In addition, the platform has a mobile-optimized checkout system feature that allows consumers to purchase products over mobile websites.
As of May 2021, Shopify Inc reported that there were 1,700,000 companies in more than 175 countries using the platform to see their products or services. Along with this incredible number of businesses utilizing the platform, 1.58 million websites are running on Shopify. They have seen massive growth in the last couple of years. By the end of 2021, their revenue report showed an impressive US $2.929 billion.
Shopify CEO – Tobias Lütke
Tobias “Tobi” Lütke is a German-Canadian billionaire entrepreneur who founded Shopify and is currently its CEO, owning 7% of Shopify’s stock. In 2014, Lütke was named “CEO of the Year” by the Globe and Mail.
Lütke owns 7% of Shopify since it went public in 2015. Seven of Shopify’s top executives are expected to leave the e-commerce platform in the coming months. The chief legal officer, chief talent officer, and chief technology are some prominent people going their roles in the company. Lütke praised the employees in a blog post on Wednesday that they were “spectacular and deserved to take a bow.” The trio decided to leave after the chief product officer left in September.
Thanks to businesses moving their companies online over 2020 and 2021, their market cap valuation is US $ 146 billion and is considered Canada’s biggest success story. While the company doesn’t expect to meet the same revenue growth as 2020 because of the vaccine rollout, they hope to exceed expectations.
Shopify stock heads for a new record
Ahead of its annual developer conference, Shopify shares begin to rise to record highs, and the enthusiasm by the company is shared throughout. As of Monday, shares for Shopify SHOP, 0.11%, are up 3.8%, trading at $1,523. The stock has been up for eight days in a row. On June 29, Shopify will host its annual Shopify Unite developer conference to reveal the new features and products introduced to the platform.
Recently, Shopify has made various moves to tap into new opportunities. One of which will include partnering with Affirm Holdings Inc AFRM, -3.06% rolling out its installment-pay offering to merchants. With the launch of their option for Instagram and Facebook this summer, we can expect big things from Shopify in the coming years.
Shopify Financial Report Quarter 1, 2021
Shopify released its first-quarter financial results for the quarter ending March 31, 2021. Here are some of their financial highlights:
- Total revenue in the first quarter was $988.6 million, up 110% year over year.
- Revenue for Subscription Solutions was $320.7 million, up 71 percent year over year, owing to more merchants to the platform.
- Merchant Solutions revenue increased by 137% to $668.0 million, mainly owing to increased Gross Merchandise Volume1 (“GMV”).
- GMV for the first quarter was $37.3 billion, up by $19.9 billion from the first quarter of 2020, with growth increasing to 114%. Gross Payments Volume3 (“GPV”) increased to $17.3 billion, accounting for 46% of GMV processed in the quarter, compared to $7.3 billion, or 42%, in the first quarter of 2020.
- Operating income was $118.9 million, or 12% of revenue, in the first quarter of 2021, compared to a loss of $73.2 million, or 16% of revenue, in the same quarter in 2020.
- Shopify has $7.87 billion in cash, cash equivalents, and marketable securities as of March 31, 2021, compared to $6.39 billion as of December 31, 2020. The increase comprises $1.5 billion in net proceeds from Shopify’s first-quarter 2021 issuance of Class A subordinate voting shares.
- In the first quarter of 2021, the company earned $1,258.4 million in net income, or $9.94 per diluted share, compared to a net loss of $31.4 million, or $0.27 per diluted share, in 2020’s first quarter. In addition, a $1.3 billion unrealized gain on their equity investment in Affirm due to its IPO in January 2021 is included in Q1 2021 net income.
- Adjusted net income4 was $254.1 million, or $2.01 per diluted share, in the first quarter of 2021, compared to adjusted net income of $22.3 million, or $0.19 per diluted share in 2020’s first quarter.
First-Quarter Business Highlights
- Shopify continued to create the basis of the Shopify Fulfillment Network, focusing on optimizing its software and network and introducing capabilities that provide merchants with greater inventory visibility and order management flexibility.
- Shop has over 107 million registered users by the end of Q1 2021, including buyers utilizing Shop Pay and the Shop App, with over 24 million being Monthly Active Users. Since its introduction in 2017, Shop Pay had facilitated approximately $24 billion in cumulative GMV by the end of March 2021.
- In the first quarter of 2021, merchants in the United States, Canada, and the United Kingdom received a record $308.6 million in merchant cash advances and loans from Shopify Capital, up 90% over the $162.4 million received the same time last year. Since its inception in April 2016, Shopify Capital has advanced roughly $2.0 billion in total capital, with $312.8 million outstanding as of March 31, 2021.
Shopify Stock News (NYSE: SHOP)
Shopify Inc’s (NYSE: SHOP) stock first went public in 2015. As of June 22, 2021, Shopify stock is trading at $1,492.21 and is currently detecting a bullish pattern. Unfortunately, Shopify does not pay any dividends.
According to Wallet Investor, Shopify Inc is a “very good” long-term investment. They predict the long-term earning potential is +33.59% in one year, with the stock price being $4,502.420 in five years (2026).
Shopify Inc’s Stock Growth 2021
Over the past three months, Shopify’s stock has risen by 35% and 25% during the last 30 days and is hitting an all-time high. This is all due to the company’s first-quarter results and their new partnership with Alphabet and Google.
Additionally, the following are likely factors in the stock’s bullish run:
- 110% Revenue Growth: Shopify’s first-quarter revenue more than doubled
- Gross Profit: With a breakout period for the tech giant, their first quarter’s gross profit rose by 117% year over year, which accounted for nearly 57% of total revenue.
- Shopify Payments processed surged 135%
- Over 1 billion shopping sessions daily, thanks to Shopify’s partnerships with Facebook, Alphabet, and Instagram. The stock’s recent surge in popularity and solid collaborations with IT heavyweights explain why investors are enthusiastic about it.
Controversy
Shopify recently made a headline with the company’s CEO releasing a controversial email to staff. The letter included the following:
“Shopify, like any other for-profit company, is not a family,” Lütke wrote. “The very idea is preposterous. You are born into a family. You never choose it, and they can’t un-family you. It should be massively obvious that Shopify is not a family, but I see people, even leaders, casually use terms like ‘Shopifam,’ which will cause the members of our teams (especially junior ones that have never worked anywhere else) to get the wrong impression.”
“The dangers of ‘family thinking’ are that it becomes incredibly hard to let poor performers go. Shopify is a team, not a family,” he added. Lütke also told staff that not only is the Ottawa-based company not a family, Shopify also cannot “solve every societal problem.” “Shopify is also not the government. We cannot solve every societal problem here,” he wrote. “We are part of an ecosystem, of economies, of culture, and of actual countries. We also can’t take care of all your needs. We will try our best to take care of the ones that ensure you can support our mission.”
This letter came after six employees expressed their disappointment that a noose emoji was added to their messaging system. The debate got heated between employees, and the company no longer wanted to engage in employee quarrels.
The company has liberal views, and following the Capitol riots, Shopify removed all sites associated with Donald Trump and QAnon conspiracy theories. However, the company stated that they aren’t trying to silence employees. Instead, they don’t want their staff to engage in controversies as it is unproductive.
Final Thoughts
Shopify is the gold standard for e-commerce solutions. Shopify’s platform is rapidly getting interwoven into daily consumer life as it cranks up its superior offerings.
Shopify has had a fantastic bounce back, and it’s mainly due to Shop Pay, Shopify’s one-click checkout solution. In addition, the potential daily shopping that can be expected through Alphabet, Facebook, and Instagram, will see Shopify’s revenue soar and positively impact their stock price.
The company will continue to expand quickly, and its strong cash balance will allow it to invest more money. As a result, buyers will pay a high price for a stock that was four times less about fifteen months ago.