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The Good, The Bad, And The Ugly About Shopify

Feb. 04, 2019 11:35 AM ETEtsy, Inc. (ETSY)AMZN, SHOP, SQ, WIX, SHOP:CA5 Comments
Crispus Nyaga profile picture
Crispus Nyaga


  • Shopify is a great company with excellent customer reviews.
  • It has exceeded analysts expectations in all quarters as a public company.
  • The company is priced to perfection as the growth in revenue and GMV slows down.


I have followed Shopify (SHOP) closely for many years and admired its growth trajectory. I was an early investor in the company when it launched its IPO but I exited the investment in 2017 because I believed the company was a bit overvalued. That was a mistake since the stock has continued to move up. As a public company, the stock has gone up by more than 500%. There is a good reason for this. Its annual revenues have increased from $23 million in 2012 to more than $1 billion in 2018. It is estimated to generate annual revenues of almost $2 billion in 2020. It has continued to add active subscribers to over 600K. Also, it has beaten the consensus estimates in each quarter as a public company as shown below. Further, with the migration to cloud over, the company will see margin expansions this year. The company has also huge potential to grow internationally. In this article, I will look at the company and explain what I think about it.

Source: Seeking Alpha

The Good

Shopify is an excellent company that solves a major problem. It helps businesses and startups around the world create a functional store within minutes. As a result of its excellent platform, it has become the second largest e-commerce platform after Woocommerce, which is an open source Wordpress platform. With the e-commerce space growing, the company will continue to attract more users in years to come. That said, here are a number of good reasons you might consider to own the company.

First, the company operates a light asset model. By this, it only operates mobile and web platforms without the need for huge capital investments. Recently, the company completed its migration to the cloud, which was a multi-year project. This migration will help improve

This article was written by

Crispus Nyaga profile picture
I am a financial analyst specializing in the technology, consumer, and industrial stocks. I operate a private office in Nairobi that invests in American and European equities. I am also the founder of rkdream.com, a financial media platform. Fellow contributor, Stella Mwende is one of my colleagues.

Analyst’s Disclosure: I am/we are long FB, AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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