Shopify: The Future Of Retail

Summary

• We believe shift from brick-and-mortar to ecommerce is inevitable. As Covid-related shutdowns forced consumers to shop online, their preferences and spending behaviors are changed forever.
• In this increasingly complex, competitive, and crowded ecommerce landscape, we believe a differentiating factor lies in merchant’s ability to deliver immersive shopping experience to consumers across multi-channels.
• We believe there’s demand from both consumers and merchants to an alternative ecommerce solution over marketplace, e.g., Amazon.
• Shopify is well-positioned for the upcoming change to the retail industry. It offers cloud-based software to build integrated retail platform for merchants. And it also offers other valuable ecommerce solutions such as payment system, fulfillment, and shipping.
• Shopify is trading 40x EV/Sales, this expensive multiple implies market’s expectation of at least $40 billion in annual revenue as the company approaches a mature state (10x TTM). We think the multiple, while expensive, merely scratches the surface of potential addressable market.

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Thesis:

We believe Shopify (NYSE:SHOP) represents one of the best e-commerce opportunities in the market today. It is an already-profitable, high-growth cloud-based software business that's set to lead in the potential $800 billion

Analyst’s Disclosure: I/we have a beneficial long position in the shares of SHOP either through stock ownership, options, or other derivatives. 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.