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Invested In Shopify? Consider The Younger VTEX

Oct. 02, 2021 7:43 AM ETShopify Inc. (SHOP), VTEX, SHOP:CA39 Comments
WideAlpha profile picture


  • Shopify is not the only option in e-commerce tech, several challengers present attractive alternatives.
  • VTEX originated in Brazil but has global ambitions and is considered a better platform for bigger customers.
  • VTEX is at an earlier growth stage, with a comparable valuation to Shopify. They have different strategies, with VTEX focused on large brands and LatAm.
  • Shopify investors should consider diversifying by adding VTEX shares, since both companies operate in the same space but with different strategies and geographical regions.

Retail and technology. Retail as a Service.

metamorworks/iStock via Getty Images

Shopify (NYSE:SHOP) is widely considered the e-commerce tech leader for small and medium size enterprises that wish to operate a web storefront. It has been growing in a spectacular fashion, but it has now become significantly

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WideAlpha profile picture
Fin-tech startup leveraging machine learning technology to discover investing opportunities and to generate growth-optimal portfolios. Publisher of the WideAlpha AI-Selected Index, which has markedly outperformed its benchmark.

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Comments (39)

Wow! VTEX is going down like a rock!

@WideAlpha what is your TP for VTEX?
SHOP is falling as if there is no tomorrow. I better stick with stable companies like AMZN. Go luck to SHOP holders. I know you are feeling the pain and its real pain. Unfortunately it has not stopped falling. House of Pains. My 2 cents.
Moreno C profile picture
I bought Shopify when it had a $3.3 B cap...
ClearEyed profile picture
@Moreno C I am curious. You keep posting about how long you have been holding SHOP, and that you bought it at a low price, and that you are still holding it. But you have kept holding it and refused to sell even when it was over $1,750 for each of the shares you must have bought for $100 or less, if the market cap was really $2b.

We have to assume that you bought the stock because you wanted to see an increase in the price per share and enjoy a profit. You have not mentioned any emotional connection you have with the stock or with the company that would keep you from selling.

So please tell me because I really am curious: if earning a $1,650 profit on each and every share you own is not is enough for you to say "Thank You" and sell, how much of a profit is going to be enough? Please, this is an honest and sincere question.
COVID and supply chain issues make anything related to retail speculative. Looking through VTEX's most recent quarterly financials is pretty ugly reading. They're moving in the wrong direction. I hate seeing lots of stock-based compensation and DECREASING profitability. I wouldn't even consider touching this with a 10-foot pole until I see something compelling in a future quarterly report.
It’s much better at an enterprise level than Shopify and has significantly bigger retailers running on it. It’s not really the right comparison to Shopify, it’s more of a competitor to Big Commerce.
Tall Seller profile picture

Shopify has significantly more bigger brands than Bigcommerce has, which is a very inferior platform in many ways to shopify.

And Bigcommerce has 90,000 merchants in 2015, 60,000 at IPO in 2020, and builwith has them today at 54,000 (aka losing more than they gain), all while shopify added near 3.8 MILLION during the same period since 2015.

BigC is a massive avoid to me, as Shopify is significantly dominating them in many ways.
Dr. Piz profile picture
New to this company but very intrigued by their moat and business model. Will start a LONG position tomorrow.
In the long run, a company with the best technology wins. I have worked for a number of major Ecommerce platform companies and was researching VTEX as a competitor. Its technology is a generation younger and better than Shopify. Despite all its success, Shopify is getting old and cannot support well big Ecommerce clients. Shopify plus was not successful and has serious scalability issues. While VTEX has modern APIs and offers much better extensions and customization options than Shopify or many other competitors. Check VTEX.IO
I also know that VTEX is investing heavily in the US and Europe, growing salesforce and accruing many large new customers there. In a couple of years, the market will stop seeing it as LatAm player. Long VTEX
Tall Seller profile picture
@Michael Vax

VTEX is not even in then ballpark as a competitor for $SHOP. VTEX has ZERO% marketshare on the DTC Power List (here: mobile.twitter.com/... ), when Shopify bow has 63% there which is 10X their top 8 competitors combined.
@Tall Seller remember when Myspace, Yahoo, AOL, Netscape, etc were once the industry giants? All tech firms are always at risk of being unseated unless they can continue to buy all of their competitors ad nauseam. The hungrier company with the better product tends to eventually win.
Rational_investor_09 profile picture
@Michael Vax completely agree. Shopify will hit a wall sooner than later. Their main market (The US) is already saturated, and they are barely profitable. As competitors like VTEX emerges margins will get squeezed even more. SE is a much better bet for international e-commerce. All that being said, all e-commerce stocks are in a bubble right now, but Shopify is definitely leading the pack
Tall Seller profile picture
“It's now up 20% year to date and trading at a price-to-earnings ratio of 70, which is an attractive valuation for a company of its caliber. With its ample growth prospects and history of success, investors may want to buy shares at their newly lowered price.”
👉🏻 www.fool.com/...

- Jennifer Saibil, The Motley Fool

More & more such BUY recommendations likely to come for $SHOP.
Tall Seller profile picture
Beep beep beep. That’s the sound of SMART MONEY backing up the truck to buy the dip with $SHOP right before the end of year e-commerce surge is due to begin.
Eric_Riggs profile picture
I have been short on Shopify since 1500 a share and I'm not covering one share anytime soon. Next support is at 800-1000
Tall Seller profile picture
Just another BUY & HOLD dip for me.
Rational_investor_09 profile picture
@Eric_Riggs same for me. Not covering one share until we reach 1000
Eric_Riggs profile picture
This is probably the worst time to invest in E commerce stocks. The growth stocks bubble is about to blow up. Especially Shopify that can't generate any net operating income even with lockdowns. This was very predictable. Smart money is playing the pump and dump. Retail investors will be left holding the bag
Tall Seller profile picture
Sounds pretty positive to me….

🗣“Shopify has recently broken into profitability so their prior investments seem to be paying off. Shareholders would no doubt be pleased with this because the business was loss-making five years ago but is is now generating 4.1% on its capital. Not only that, but the company is utilizing 5,517% more capital than before, but that's to be expected from a company trying to break into profitability. We like this trend, because it tells us the company has profitable reinvestment opportunities available to it, and if it continues going forward that can lead to a MULTI-BAGGER performance.

In another part of our analysis, we noticed that the company's ratio of current liabilities to total assets decreased to 4.3%, which broadly means the business is relying less on its suppliers or short-term creditors to fund its operations. This tells us that Shopify has grown its returns without a reliance on increasing their current liabilities, which we're very happy with.”
- Simply Wall St.

too much competition. no moat. race to 0
Tall Seller profile picture
Why do you think shopify DOUBLED their merchant count over the last 9 months to 3.5 MILLON
ClearEyed profile picture
@Tall Seller 75% of those businesses won't be round in 3 years.
But with only 40% growth in the latest quarter and off a small base, why invest in them when SEA, Meecadolibre and Shopify are growing in triple digits, high double digits and 57% respectively from a much larger base. Literally what’s the point. If you want a LatAm niche player then dlocal is growing faster. If you want a smaller cap ecommerce play then Global-e Online is growing much faster.
I am checking this out!
@author: "LatAm is the region with the fastest e-commerce growth in the world with a 37% growth rate", bc it has only a 6% e-commerce penetration. The law of small numbers translating into big percentages.

More importantly, VTEX is a Brazilian Co with 94% of revenue coming from LatAm countries, mainly Brazil. I couldn't think of more red flags going up all at once. Unstable, corrupt gov'ts and shaky state finances (inflation, devaluations, IMF standby etc.) aren't the best foundation for LT investments. Established/proven competitors like SHOP, SE and even MELI (if you like LatAm) IMO are better risks than VTEX, that's already dropped below its recent IPO price.

@WideAlpha what is your target price for VTEX?

The share price has been on a downward trend... If a crash of the growth stocks will emerge during the next months, I would not be surprised to see VTEX below $7 per share.
Tall Seller profile picture
With the of year massive e-commerce SURGE coming down the pipe for the right e-commerce companies, those right plays coins show an acceleration in growth. I’m not saying VTEX is one of those but it certainly is the case for the likes of $SHOP who Builtwith says their merchant count DOUBLED to 3.5 million in the last 9 months (seen here: trends.builtwith.com/... ).

With that kind of surging merchants growth combined with end of year holiday e-commerce surge, and at least $SHOP should blow consensus estimates significantly out of the water.
ClearEyed profile picture

2021-09-24 14:24:00 GMT DJ Vtex Price Target Announced at $30.00/Share by Morgan Stanley Raised to Overweight from Equal-Weight

2021-10-21 08:44:00 GMT DJ Vtex Price Target Cut to $30.00/Share From $35.00 by Keybanc - Maintained at Overweight
Tall Seller profile picture
VTEX ‘might’ become a good investment but they absolutely will never be in the ballgame for becoming a Shopify. Shopify is light years ahead across the world and across many platforms where they have the clout, connections, partnerships, ecosystem, money, 3rd party developers, investments into companies, etc., to beat VTEX at EVERY step worthwhile (when it comes to global domination).

And Shopify is already expanding in South America too right now. And here are some of their integrations there:


Be careful, VTEX does not offer anything novel or differentiated and Shopify is miles ahead in their ability to make serious moves to crush competitors just like they do everywhere in their niches.
Is VTEX better than CPNG (Putting valuations aside)? Thanks
mcolavita profile picture
Would definitely choose $SE over $VTEX .... if you want to diversify from $SHOP $MELI in South America

Would definitely wait for a few quarters after the IPO to consider jumping in VTEX.
Tall Seller profile picture
As good as $SE is, Shopifys growth ahead as the world leading de facto agnostic B2B, POS, and omnichannel everything/everywhere commence enabler is astronomically bigger than $SE will ever come close to attaining. It’s like 1000X bigger opportunity for $SHOP.
Tall Seller profile picture
…for e-commerce that is.
dwitzany profile picture
Thanks, but when you introduce an acronym, perhaps even a Three Letter Acronym (TLA) do it like that, so the reader doesn’t have to hunt to confirm the acronym’s meaning.
Also, I wonder if this is the kind of market, Global E-commerce platform, where BOTH can be successful. Is this similar to Google and Bing, or not? I was looking for some consideration of that issue too.
@dwitzany I disagree and think the author did fine by not spelling out the acronym for us. It forces us to hunt and do our own research which keeps us engaged in the process and builds our knowledge base in a stronger way. DYODD.
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