Shopify's Resilience: Navigating the E-Commerce Evolution

Shopify… the tried-and-true company responsible for your favorite drop shipping and course selling gurus. Nothing screams experience like a Shopify sales dashboard and an arsenal of AliExpress products. 

I digress.

What is the talk around the stock? Well, they certainly have experienced a roller coaster of emotions but is there an underlying opportunity worth exploring? 

In 2022, the bear market wiped out 85% of its value as prices dropped to $23.63 per share. Since then, it has risen 240% while currently trading around 48% of its peak value in 2021 at $208 per share. 

Now, a lot occurred during that time period to project such chaotic activity. Shopify lost nearly $525 million investing into a fulfillment and logistics arm, causing their balance sheet to, well, look like sh*t. Positioned as a money-losing operation, the weight got too heavy to carry and the company sold that angle of the business. Smart move I’d say. 

Forward looking, where does the company stand? 

Let’s look at the industry. 

The E-commerce market is expected to reach $19 trillion by 2029. Shopify holds the 4th largest market share behind WooCommerce, WooThemes, and Squarespace. 

Consumer tendencies continue to shift towards online purchases.

With a market cap of $130 billion, if projections hold true, they are properly positioned to benefit from the industry's forecasted growth. 

Now Operations

Their core operations continue to streamline the business process for its users. Offering services such as inventory management, payments, capital raising, etc. to support the business cycle. 

What some might not know is that their merchant solution is a revenue-driving machine. These include payment processing fees but as well as the ability for companies to integrate Shopify's services into their existing website. 

Notable Financials (2023 Q3) 

• Total revenue increased 25% to $1.7 billion compared to the prior year, which translates into year-over-year growth of 30%
• Gross profit grew 36% to $901 million, compared to the prior year
• Operating income was $122 million, or 7% of revenue, compared to an operating loss of $346 million, or 25% of revenue, for the comparable period a year ago, driven primarily by higher gross profit and lower operating expenses in the quarter.

I don’t know much about much but with the amount of dropshipping ads I see and my ex-girlfriend launching an e-commerce skincare company, I’d say Shopify is poised for the long run. 

As far as the stock? I'm holding.