# Shopify SHOP-T



## jargey3000 (Jan 25, 2011)

Anybody own this? Saw it recommended on stockchase. Any comments?


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## bflannel (Apr 21, 2013)

I've owned it in the past but no longer have any (sold to help fund a RE purchase) 

I really like their products. Which is a good start. They have integrated the whole e-commerce supply chain under one umbrella and made it nearly seemless and veru user friendly. Very functional. They've run up recently but I don't doubt the sector still has room to grow as more and more business turn to e-commerce platforms. Notably they've recently integrated into Amazon and I feel like this will drum up up a lot of sales. Great for their direct customers and good for them. 

Do as you please but you gotta love them for being Canadian tech players!


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## james4beach (Nov 15, 2012)

The best performing stock in Canada, which barely ever gets a mention on this board. Look at this dead thread, not a single post since 2017. In this time, SHOP has gone up 13x.

*Shopify is now the third largest company in Canada by market value, and soon could be worth more than TD Bank:*

RY $125 billion
TD $103 billion
SHOP $97 billion
ENB $84 billion
CNR $80 billion

It's possible that COVID-19 is accelerating a move that was already underway: moving merchants online (using the Shopify platform) and away from brick & mortar business.

Or is the stock in just some kind of momentum / price bubble? That's what makes the business world so fun... you get to figure out whether you think this is a silly bubble stock, or the real thing: the emergence of a new giant in the economy.

Those using 5-pack and 6-pack type of investments generally ignore new companies like this, and stick to the old (traditional) favourites. In fact, many Canadian investors omit the tech sector entirely!


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## doctrine (Sep 30, 2011)

Valuation is pretty crazy. It might have a bigger market cap than TD, but TD's net profits are almost 7 times more than Shopify's revenue. Shopify has never posted an annual profit.

I'll remind the viewers that the vast majority of successful technology companies actually do post profits. Facebook and Google both had big fat annual profits before going public. Shopify are growing at any cost and are only able to do so by issuing more shares and raising new capital.

It may work out for them, but the jury is certainly not out, and if a big tech company decides to take a run at their business line, they could suffer quite a bit. Much like other tech darlings of Canada's past.


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## james4beach (Nov 15, 2012)

Yup, Shopify is now worth more than TD. It's now the second most valuable company in Canada, only behind RBC.

At the same time we're watching the "physical" economy collapse (oil prices are suggesting a Depression) perhaps we are witnessing a historic shift to the digital economy. Maybe Shopify emerging as a Canadian giant is an indication of this "paradigm shift"?

It's really hard to know if that's what's going on, because it could also be stupid overpricing of SHOP that is unjustified. But how exciting! Is this a paradigm shift and transformation of the economy, or just stupid mispricing?


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## james4beach (Nov 15, 2012)

Shop owners frantically launch online stores to stay open during pandemic


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## MrMatt (Dec 21, 2011)

I was thinking of this today, I hear Shopify is actually great, and their pricing is very competative.








Shopify Pricing - Setup and Open Your Online Store Today – Free Trial


Set up your store, pick a plan later. Try Shopify free for 3 days, no credit card required.




www.shopify.ca





There is competition, but they're clearly one of the global leaders.

That being said, I'm not sure the valuation makes sense, of course I said that when AMZN was "only" at $400/share.


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## james4beach (Nov 15, 2012)

Shopify sales grew 47% from a year ago, beating estimates. The stock hit another all time high, now over $1000 for the first time.

Shopify sales surge as businesses shift online amid pandemic - BNN Bloomberg


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## doctrine (Sep 30, 2011)

Revenue up 50%. Negative operating income up 100%. They will grow revenue and make up the negative margin on volume.


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## james4beach (Nov 15, 2012)

I'm looking at their financial statements ending March 31. While their profit is up 43% versus last quarter, their operating expenses were up 53%. In fact, their quarterly net loss worsened. This story is even worse with Comprehensive loss.

The Comprehensive loss figure is the more important one as it includes effects of various hedges they are using for managing the business. *Last quarter, their comprehensive loss was $15 million and this quarter it's worsened to $48 million loss*.

Part of the reason those numbers are so bad is that they are giving a ton of stock-based compensation. Last quarter, $31 million and this quarter, $54 million in stock compensation expenses. Yikes! Think of it this way. They would be profitable, except *they are paying out all net earnings in stock compensation*. They did the same thing last quarter too.

Last quarter: $31 million stock comp, $15 million net loss
This quarter: $54 million stock comp, $48 million net loss

I'm not sure why that's such a great result for a shareholder. In fact even if we exclude the stock compensation, their income this quarter is *still worse*.

Volume was up tremendously. If their business machinery was working so well, we'd be seeing a narrower loss -- not a larger one! I think SHOP would be really exciting if their income was consistently becoming more positive, but that's not what's happening.

On the plus side, they have stellar liquidity, no debt. This is a pretty "low risk" company, meaning low risk of the company failing, and no reliance on debt.


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## Money172375 (Jun 29, 2018)

james4beach said:


> Yup, Shopify is now worth more than TD. It's now the second most valuable company in Canada, only behind RBC.
> 
> At the same time we're watching the "physical" economy collapse (oil prices are suggesting a Depression) perhaps we are witnessing a historic shift to the digital economy. Maybe Shopify emerging as a Canadian giant is an indication of this "paradigm shift"?
> 
> It's really hard to know if that's what's going on, because it could also be stupid overpricing of SHOP that is unjustified. But how exciting! Is this a paradigm shift and transformation of the economy, or just stupid mispricing?


now the #1 most valued company in Canada









Shopify overtakes RBC as most valued Canadian company as online services in demand


CEO says company is working as fast as it can to support its merchants by re-tooling its products to help them adapt to the new social-distancing reality.




www.thestar.com


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## james4beach (Nov 15, 2012)

Unbelievable! According to Yahoo Finance

SHOP $121.3 billion
RY is worth $120.5 billion
TD $102.7 billion

Mind boggling


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> ... It's really hard to know if that's what's going on, because it could also be stupid overpricing of SHOP that is unjustified. But how exciting! Is this a paradigm shift and transformation of the economy, or just stupid mispricing?


Or it could be bits of both ... nothing says it has to be one or the other exclusively.


Cheers


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## Money172375 (Jun 29, 2018)

James.....are you old enough to have lived through Nortel and RIM? I suspect the different generations will have wildly different views on SHOP until proven otherwise.

I worked near a Bell office early in my career.....many of the employees kept their Bell shares in our vault. Eventually Bell spun off Nortel and for a few years, these regular folk saw dramatic increases in their personal net worth (on paper). They’d talk about it every time they went in and stored away their Bell shares. Can’t imagine the wealth that was lost. As a youngster, I thought I was smart paying $5 a share (on the way down) for Nortel......lost $1500 and didn’t know better to claim the capital loss. Ah youth!


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## james4beach (Nov 15, 2012)

Money172375 said:


> James.....are you old enough to have lived through Nortel and RIM? I suspect the different generations will have wildly different views on SHOP until proven otherwise.


Yes I'm old enough. I started investing around 2000 and was studying engineering at the time. Some friends of mine had internships at Nortel and people talked about the stock a lot. Some had bought NT shares, but I didn't.

RIM was even better since I lived in Waterloo during the crazy years. I watched the whole city transformed to RIM town... the parks, events, everything was RIM branded and funded. RIM actually funded the lab I worked in. My advisor was on RIM payroll and nearly everyone I knew worked there!

People wouldn't shut up about RIM and Blackberry and I was actually very relieved when the stock imploded and everyone stopped talking about it all the time.

But I think one should also be cautious about writing off a stock just because of a booming share price and value. AAPL and AMZN are two other instances, which for a long time, looked like stupid bubble stocks. Apple basically had a flashy, fashionable toy product (iPod and early iPhone) which many people bought due to the fad. I asked my girlfriend at the time why she wanted an iPhone and she giggled and said, "it looks cool and it's white". And there really is an Apple cult.

AMZN had no earnings for a very long time, and I even saw a PhD thesis trying to analyze what the deal is with AMZN. Nobody could make sense of the disconnect between their financial results and continuing stock trend.

AAPL or AMZN could have easily turned out to be dumb, momentum driven stocks. Today, market caps of AAPL and AMZN are $1.2 trillion and $1.3 trillion. In comparison, the largest bank stock JPM is barely worth $0.3 trillion.

FB is another example, which still seems like a stupid fad to me. The platform basically looks like a busy Myspace experience that's full of politics and junk advertising. I find it disgusting and most of my friends don't touch it. Who knows if it has lasting power?

So what I'm saying is that if you look at a group like AAPL, AMZN, FB, RIM, NT, SHOP -- it's very difficult to separate out which are transforming the world (the real deal) vs overvalued bubbles.

Recognizing which stock is dumb, and which is the real deal, *is easy in hindsight*. I don't think it's so clear in real-time. So the question remains... does SHOP really have a strong future in our new economy? I have no idea.

(Below: a Halloween costume after the RIM crash)


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## nobleea (Oct 11, 2013)

I had a co-op term with Nortel. It was right at the peak. People were talking about whether to buy before or after stock splits. The plant I was working at got sold off to a third party manufacturer.
Once I graduated, I was offered a job with RIM that came with options. I didn't take the job because I didn't know anyone within 2 hours of Waterloo. Had I taken it and kept the options until the top, I would have been a multi millionaire before 30.

I like SHOP as a client, but it's hard to justify as an investor. There's really no moat for other companies to enter, unlike RIM and Nortel which had patents and technology. Some say Huawei is where they are because they stole everythign from Nortel, but that's another story.

Maybe SHOP manages to focus on costs and gets rid of the stock options and compensation and can start turning a profit. Even if they do make profit, I can't see it ever being high enough to justify a reasonable multiple. You could take a look at their number of paying clients and how much you'd have to raise fees to make a reasonable profit and justify a P/E of something like 40-50. I bet it's impossible.


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## Money172375 (Jun 29, 2018)

james4beach said:


> Yes I'm old enough. I started investing around 2000 and was studying engineering at the time. Some friends of mine had internships at Nortel and people talked about the stock a lot. Some had bought NT shares, but I didn't.
> 
> RIM was even better since I lived in Waterloo during the crazy years. I watched the whole city transformed to RIM town... the parks, events, everything was RIM branded and funded. RIM actually funded the lab I worked in. My advisor was on RIM payroll and nearly everyone I knew worked there!
> 
> ...


I found my old Blackberry Bold in my cleanup today. Powered it up. It’s password locked and I can’t remember the password. Do these things even have wifi capability? I don’t recall wifi (outside of the house) even being discussed 10 years ago.


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## Money172375 (Jun 29, 2018)

nobleea said:


> I had a co-op term with Nortel. It was right at the peak. People were talking about whether to buy before or after stock splits. The plant I was working at got sold off to a third party manufacturer.
> Once I graduated, I was offered a job with RIM that came with options. I didn't take the job because I didn't know anyone within 2 hours of Waterloo. Had I taken it and kept the options until the top, I would have been a multi millionaire before 30.
> 
> I like SHOP as a client, but it's hard to justify as an investor. There's really no moat for other companies to enter, unlike RIM and Nortel which had patents and technology. Some say Huawei is where they are because they stole everythign from Nortel, but that's another story.
> ...


it seems its hard to stock pick in tech until you’ve missed the boat. Better to buy a tech basket or index and see what happens....although people are doing it with Apple and amazon still and making money.

I got caught up in the tech bubble in the late 90s as an entry level bank teller. we placed trades by phoning in....did web trading exist? can’t remember. Anyway, some of the tellers use to call the trading desk while serving clients....you’d be on hold 5-15 mins anyway.
bought into a company called USA video. Had a client who was correctly predicting the trading price week after week. Think we started buying at $0.13. Guy kept calling the price all the way up To $15. Blockbuster is gonna buy them and ”stream” movies right to your home. Don’t think we used the word streaming, but you get the idea. “It’s going to $30”.
of course, it didn’t...and we continued to buy all the bay down as it crashed to nothing. I think someone bought them (oculus?)......but it’s basically worthless today.


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## james4beach (Nov 15, 2012)

A little known fact about stocks is that, of all the stocks which are ever created and listed, MOST turn out to ultimately be worthless. There's only a small % of stocks which ever perform well. I can't remember the stats from the study I read, but a shockingly tiny % of stocks ultimately outperform cash.

Another little known fact is that indexes such as the TSX and S&P 500 actually have a human review committee. They do screen stocks, and manage the portfolio. So "indexing" is actually professionally run portfolio management. Except, it's very low cost and very low turnover.


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## 30seconds (Jan 11, 2014)

Money172375 said:


> it seems its hard to stock pick in tech until you’ve missed the boat. Better to buy a tech basket or index and see what happens....


What tech US ETF do people like? VGT? QQQ? None seem perfect. I am surprised their isn't a FANG+ ETF yet


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## james4beach (Nov 15, 2012)

QQQ is more or less tech stocks so if someone insisted on buying tech, that's what I'd point them to.

Myself, I work in tech, so I generally avoid investing in tech stocks. I already have enough exposure through my work. Same logic applies to people working in oil & gas: if you depend on a sector for your livelihood, the last thing you want to do is invest in those equities and increase your exposure even more.

In a downturn, you'd lose your job *and* see your investments crash at the same time. I've already seen it happen to friends who work in software/tech, and now I'm seeing it happen to friends in the energy sector too.


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## doctrine (Sep 30, 2011)

What a surprise. Shopify selling 1,850,000 shares. Likely $1.85 billion Cdn, plus up to 15% more in oversuscriptions. The story continues. With a high share price, you can carry on operating at negative margins indefinitely. They should issue as many shares as possible. Kind of like cannabis companies in 2017-18. You have to fill that valuation. This will also make their P/B ratio of 26 to 1 much better.


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## Eclectic12 (Oct 20, 2010)

james4beach said:


> Money172375 said:
> 
> 
> > James.....are you old enough to have lived through Nortel and RIM? I suspect the different generations will have wildly different views on SHOP until proven otherwise ... Can’t imagine the wealth that was lost. As a youngster, I thought I was smart paying $5 a share (on the way down) for Nortel......lost $1500 and didn’t know better to claim the capital loss. Ah youth!
> ...


I don't have to imagine what was lost ... I've had people tell me that their Nortel stock hit $1 million but they were busy with their life so the next time they looked, it had been destroyed. Friends of the family said that if his brother had sold or said to sell, they would have told their $600K stake.

I'm on the other end ... I didn't have the money and was leery of values so I only had about three shares of BCE pre-Norteal spin off. It was bought to practice buying/selling online.

I was going to buy in at $0.77 but a co-worker said Nortel employees on his beer league hockey team didn't recommend it. I waited awhile then bought at $3. When it hit $12, I sold 2/3 and when it started crashing I sold the rest for $8. It was money I could comfortably lose so it wouldn't have been a big deal if it went the other way.




Money172375 said:


> ... I don’t recall wifi (outside of the house) even being discussed 10 years ago.


Might be who you hang out with and possibly your job that limited the discussion. I can recall paying for wifi in Starbucks to fix problems on office servers in 2003. Similar at a Second Cup in Mississauga in 2005. Fortunately, work picked up the wifi tab.

The move to free wifi was great.

Keep in mind that the 802.11 standard was setup in '97. A fair amount was taken from the AlohaNet that connected the Hawaiian Islands with a UHF wireless packet network in the '70's.




Money172375 said:


> ... I got caught up in the tech bubble in the late 90s as an entry level bank teller. we placed trades by phoning in....did web trading exist? can’t remember ...


Yes ... TD Waterhouse offered it in '96. Phone orders were something like $45 while the online was something like $15. The tech crash plus the requirement to have a live person review each online trade meant I phoned in couple of orders, explained I would have preferred to do it online but couldn't risk the delay and was billed the cheaper online rate.


Cheers


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## james4beach (Nov 15, 2012)

I think the stock is a bubble (overpriced), caught up in a hype.

SHOP market cap: $126 billion
RY market cap: $118 billion

I ordered from a retailer yesterday that was using the Shopify platform. Yes, it looks like a solid platform and creates a professional experience. There are competitors, but Shopify sounds like the easiest, most popular one today. Another one that's also pretty easy to use is Square (SQ).

That reminded me of the excitement I saw first hand during the rise of Square when I lived on the US west coast. Many small vendors started adopting Square, and people wouldn't shut up about it. I think that kind of environment leads to an amateur-driven hype, pushing the stock up. You can clearly see the hype in the SQ stock chart, attached.

Here's what I think is happening:

it's a hype and fad, just like SQ was (briefly)
Shopify is exploiting the hype with share issuance + huge compensation
rally has a limited lifetime, but got a huge surprise boost with COVID
it's impossible to short sell stocks like this
What contributes to the price distortion is the short selling problem. One might ask, why wouldn't institutions be short selling this? The SQ chart shows why. Something may be a stupid fad, but what happens if you short it at $30 while it continues going to $100 ?

Instead, *joining the momentum rally* is usually the more profitable trade. And since SHOP has a good story behind it that resonates with non-professionals, it's easy to justify going long.

Shorting this is suicide. Therefore, we don't get "price discovery" and normalization.


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## james4beach (Nov 15, 2012)

Here's another reason SHOP is rallying like mad. Momentum and technical traders look everywhere in the market to find hot stocks showing good trends.

With the stock weakness in 2018 and now 2020, there are extremely few stocks that are still showing solid, uninterrupted momentum. In other words, it's extremely difficult to find a momentum rally to join, and it became even harder after this recent crash.

SHOP is one of the only games in the market and it's listed in the US (sadly). Therefore, momentum traders from around the world have piled into SHOP. Many of them probably know it's a bubble... it's somewhat of a ponzi scheme now. The goal is to ride the trend and get out, not buy & hold long term.


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## peterk (May 16, 2010)

I had not realized until yesterday that the recovery of XIU was driven almost entirely by SHOP and the Gold companies in the index. Excluding just those few companies is a lot less pretty picture, especially compared to the much broader US markets recover.
The reported Canadian market recovery news for the past month is somewhat misleading.


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## james4beach (Nov 15, 2012)

peterk said:


> I had not realized until yesterday that the recovery of XIU was driven almost entirely by SHOP and the Gold companies in the index. Excluding just those few companies is a lot less pretty picture, especially compared to the much broader US markets recover.
> The reported Canadian market recovery news for the past month is somewhat misleading.


I wouldn't say entirely, but it's true that XIU is getting a nice boost from gold and tech. The whole point of indexing is that you don't really know which companies might drive returns in the future, so you hold all of them cap-weighted, and let whichever is successful (the larger market caps) drive the returns.

In the US, index returns for many years now have been driven by tech. If you go back in time to 2005, nobody wanted to invest in tech. After the tech crash, the sector was hated... but it has turned out to drive most of the S&P 500 returns. Today, the US is all about tech stocks:
MSFT is 5.7% of S&P 500
AAPL is 5.1%
AMZN is 4.3%

It's the beautiful thing about indexing. It's adaptive; whichever companies turn out to be strongest are the ones which drive your returns.

If in the future, energy comes back strongly and drives most of the TSX returns, then an investor in XIU will do better than someone who tried hand-picking stocks, and excluded energy.

Or if we enter a high inflation / currency devaluation period, commodities could do great. Miners and materials could be the main drives of the TSX. But again, the stock pickers (including me) always exclude commodity stocks, so we would miss out.

These days, it's very popular to exclude energy and commodities. And just about nobody in Canada owns Canadian tech, even though it's been the strongest sector for a decade now. These are potentially huge mistakes of stock-picking, but XIU doesn't suffer from that.


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## alexincash (May 27, 2020)

Even though the share price has been doing extremely well YTD im still bullish on SHOP. Even though it wont affect the fundamentals I'd like to see a stock split soon


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## m3s (Apr 3, 2010)

Shopify deal with Walmart (Bloomberg)


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## MrBlackhill (Jun 10, 2020)

I think we may be talking about this "bubble" for yet another few years, so if the bubble is really going to pop, we don't know when because it's been 5 years that we've been talking about that bubble and yet here we are, still moving up. I'd use Shopify for short-term investments with small positions and leave a few shares on the long run. I personally own SHOP only indirectly as part of my small position on XIT. I've made as much money this year on KXS that I would've done on SHOP.

SHOP's last years return
2016 : +75%
2017 : +120%
2018 : +35%
2019 : +180%
YTD : +100%

I agree that it does not seem sustainable based on the balance sheet and a few valuation measures. That being said, I think SHOP may be a good investment, but I won't buy it at this price, so I'm skipping my turn. I agree that SHOP is currently playing with its hype.

I don't know much about stocks maintaining a hyper-growth during a few years, the only one that comes up to my mind is KL which did +1775% from 2016 to 2020, that's more than +100% annual growth for 4 years, but let's not compare gold and tech. Let's just say that KL maintained this with a current P/E of 17 and P/S of 8, while SHOP's P/E is negative and P/S is 75... (based on Yahoo).

Please note that I'm an inexperienced trader and I wish I had started a decade ago, therefore my opinion and comments may not be the most worthy.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> I think we may be talking about this "bubble" for yet another few years, so if the bubble is really going to pop, we don't know when because it's been 5 years that we've been talking about that bubble and yet here we are, still moving up.


The tricky thing with bubbles is that (a) you never know how long they could last and (b) it could turn out to not be a bubble, and actually supported by fundamentals.

I don't see any problem with XIT as a diversified bet on the Canadian tech sector. This sector is under-represented in the broad indexes.

I'm not entirely convinced it's all a bubble.


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## Money172375 (Jun 29, 2018)

Sounds like volunteers at Shopify built the new national Covid19 tracing app.

edit: with Blackberry too


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## MrBlackhill (Jun 10, 2020)

Retail sales report released : The Daily — Retail trade, April 2020

Now let's see e-commerce : Retail e-commerce sales – Unadjusted


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## james4beach (Nov 15, 2012)

SHOP market cap: $166 billion
RY market cap: $131 billion

This is really crazy stuff. SHOP went from being a hair larger than RBC to 27% larger.

I really think that the Federal Reserve has fuelled an insanity in stocks. They printed tons of money, and I think this sparked "irrational exuberance" in the stock market; especially tech stocks. SHOP appears to be one of the beneficiaries.


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## JohnTobbs (Jun 24, 2020)

Shopify Stock (TSE: SHOP) is pretty impressive. The stock price just keep growing and growing. Right now in July 2020, the stock price is much more than double what it used to be in 2019. It is an impressing stock, such as Apple stock, that just keeps growing and growing.









Shopify Stock Shows Excellent Growth


Shopify Stock (NYSE: SHOP) has shown excellent growth. The company launched in 2004. Shopify w ent public on May 21, 2015, and in its d...




www.igorbnews.com


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## MrBlackhill (Jun 10, 2020)

I'd still be cautious with SHOP unless you want some quick profits over the short term before something bad happens.

SHOP is now at 60 P/S (or even 95 ttm P/S). Last year, it was at 30. Previous years, it was around 10-15 P/S. Until the end of 2018, that 10-15 P/S was healthy, but now its valuation is way over its sales.

FAANG stocks were always below that 15 P/S range in the last 5 years.
Our TSX top tech stocks were always below 20 P/S over the last 5 years (CSU, DSG, KXS).
[EDIT] Look also at TSLA. It just did x6 in a year, but its P/S is still below 15.

SHOP's revenue went from 400M in 2016 to 1600M in 2019, which is x4. Meanwhile, its price did about x10.
2020's sales better keep up on investor's excitement...

Personally, I hold SHOP only through XIT at the moment.

I'm pretty sure SHOP will drop 20-30% in the near future. I'm glad SHOP slowed in the last 2 months, because XIT's distribution algorithm got up to almost 40% on SHOP by the end of April. That's way too much of a single stock in an ETF.


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## MrBlackhill (Jun 10, 2020)

I don't know why would any investor buy SHOP at the moment. P/S over 60, negative EPS, negative RoE, RoA, RoIC, negative Net Margin, negative Operating Cash Flow, negative Free Cash Flow, negative most of everything... It was maybe a good investment at 500 CAD, but recently it was just a trader's gamble for _potential_ quick money. I can't wait to see their Q2 ER which should be due on July 29th.


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## MrBlackhill (Jun 10, 2020)

Earnings report... share price +10%... but I still think this is very, very overvalued. Doubling the quarter revenue year-on-year is still not enough when your P/S is above 60.

And that revenue growth is not due to Subscription Solutions nor Monthly Recurring, it's due to Merchant Solutions which makes sense during COVID.

They have been profitable this time... but that's still a P/E of more than 1000. (That's why I look at P/S, but even that ratio is still too high)


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## MrBlackhill (Jun 10, 2020)

All my comments are not _against_ Shopify, but only its valuation.

In fact, I'd really like to buy some Shopify and hold long, but I won't allow myself to buy this if it's still over 950$ by mid-October or over 1000$ by mid-November.



MrBlackhill said:


> I'm pretty sure SHOP will drop 20-30% in the near future.


I wrote this on July 7th when it was at 1376$. It's currently at 1143$, which is 17% lower. Unfortunately, that's still too high for me.


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## Jimmy (May 19, 2017)

SHOP is a great stock and everyone should own a small holding of this for the next 5 yrs anyway IMO . Maybe a little overvalued as it is probably the most public of the CDN growth stocks w it's P/S at 60 but that is ok as it is growing sales still at 60%/yr so P/S/G is ~ 1. It is at $1348 and analysts have targets at ~ 1400-1500.

Returns are 247% ytd. Even for a small 2% holding, this should be a must have in every portfolio.

It does take a stronger stomach though as you will have 20 -30% declines along the way . But this stock has averaged over 300%/ytd for the past 3 yrs and more since its inception so you are well rewarded.

There are some better tech stocks for valuation though here and in the US. A company like Goodfood for example only has a P/S of 2.4 and is growing sales at 70%/yr, up 196% ytd. JD.com. P/S 1.17 Sales growth 32%, up 130%.


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## MrMatt (Dec 21, 2011)

I'm stuck on valuation.

Okay, what's the projection for 5 year revenue, will the stock make sense then?
10 years? How much of the market do they need? How big a market will be?


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## MrBlackhill (Jun 10, 2020)

I want to buy SHOP but I'm currently waiting due to its valuation, even considering its revenue growth. I was waiting for $950 when it was near $1500 and dropped around $1150. Maybe I missed an opportunity. Now I'm waiting for $1050 or I'll readjust my target after earnings results. I have a very small exposure to SHOP through XIT.

I like FOOD, I'm watching it closely. I'm not sure about its D/E though. But otherwise I like it.

JD is on my watchlist, I'd definitely buy that one.


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## Jimmy (May 19, 2017)

MrMatt said:


> I'm stuck on valuation.
> 
> Okay, what's the projection for 5 year revenue, will the stock make sense then?
> 10 years? How much of the market do they need? How big a market will be?


The are growing revenues at 40-50%/yr. They could become more like an Amazon w slightly lower growth but still growing revenue at 30%/yr after 15 yrs. Yes They have a winning platform for esellers. The ecommerrce market is huge~ $3.5T and growing at 18% /yr. Their sales are ~ $2B so lots of room for growth


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## Jimmy (May 19, 2017)

MrBlackhill said:


> I want to buy SHOP but I'm currently waiting due to its valuation, even considering its revenue growth. I was waiting for $950 when it was near $1500 and dropped around $1150. Maybe I missed an opportunity. Now I'm waiting for $1050 or I'll readjust my target after earnings results. I have a very small exposure to SHOP through XIT.
> 
> I like FOOD, I'm watching it closely. I'm not sure about its D/E though. But otherwise I like it.
> 
> JD is on my watchlist, I'd definitely buy that one.


I grabbed SHOP when it fell to ~ $1200 in Sept. I don't think you'll get more than a 20% discount. 

Another stock I am watching is Converge Technology Solutions, a small Saas company, after some favorable reviews on the Globe and other sources. It is small but growing sales at 50%/yr and P/S is just 2.99. And the small e health companies Cloud MD and Well health.


----------



## MrMatt (Dec 21, 2011)

Jimmy said:


> The are growing revenues at 40-50%/yr. They could become more like an Amazon w slightly lower growth but still growing revenue at 30%/yr after 15 yrs. Yes They have a winning platform for esellers. The ecommerrce market is huge~ $3.5T and growing at 18% /yr. Their sales are ~ $2B so lots of room for growth


Total US sales were about $4T








US ecommerce sales grow 14.9% in 2019 | Digital Commerce 360


Online spending represented 16.0% of total retail sales for the year, according to a Digital Commerce 360 analysis of Commerce Department retail data. Amazon accounted for more than a third of all ecommerce in the United States.




www.digitalcommerce360.com




.

Shopify revenue is 1.6B (2019)
at 45%/yr, thats 45B in 10 years, which is a HUGE chunk of todays US consumer market.

Lets say they have 10% net profit, so 4.5B, vs todays market cap of 120B, so 3% earnings yield at that time.

Yes there is the global sales, but Amazon, Alibaba & others aren't going to switch to shopify. Plus other competitors.
A google buyout makes a lot of sense, but $100B is high price.

Also Amazon "Alexa, order more toilet paper for 1 hour delivery" is something that Shopify won't match near term.


Very rough numbers, but Shopify has a valuation problem that I can't get over.


----------



## Jimmy (May 19, 2017)

MrMatt said:


> Total US sales were about $4T
> 
> 
> 
> ...


I appreciate your concern and looked a this a little more. IMO these companies can't really be viewed w the dividend yield type model because their cost structures are entirely different than a typical blue chip dividend paying company.

Many are more or less scalable. Once the platform is built, there is little incremental cost to add new customers though there are some cost increases ( a little more sales, more data centers). That is why these companies see cash flows really increase as they get older w much of the new customers sales just flowing through to the bottom line. Add 46% in sales, adds 46% in earnings and the price just marches up 46% in keeping w the P/S multiple. You don't need to worry about yield when the stock is returning 46%/yr.

There are better tech investments out there though. Shopify has a P/S of 51, growing sales at ~ 50% ( though they warn this growth could decrease).

A new company like Converge for ex has a P/S of just .49 and is growing sales at 45% so there is much greater return potential w the 45%/yr from new sales + the P/S multiple expansion.


----------



## MrMatt (Dec 21, 2011)

Jimmy said:


> I appreciate your concern and looked a this a little more. IMO these companies can't really be viewed w the dividend yield type model because their cost structures are entirely different than a typical blue chip dividend paying company.
> 
> Many are more or less scalable. Once the platform is built, there is little incremental cost to add new customers though there are some cost increases ( a little more sales, more data centers). That is why these companies see cash flows really increase as they get older w much of the new customers sales just flowing through to the bottom line. Add 46% in sales, adds 46% in earnings and the price just marches up 46% in keeping w the P/S multiple. You don't need to worry about yield when the stock is returning 46%/yr.
> 
> ...


I think I agree... conceptually.

But even if they 10x sales, and keep costs the same, the valuation case is still tough for me, though it is getting there.

That's where I have trouble with the valuation.
Unlike Amazon, which I believe will swallow everything, until the government shuts them down.


----------



## afulldeck (Mar 28, 2012)

Shopify stores riddled with fakes and fraudsters...tell me this isn't so....









Shopify stores riddled with fakes and fraudsters


E-commerce authentication service Fakespot says 21% of Shopify stores pose a risk to customers.



www.bbc.com


----------



## ian (Jun 18, 2016)

That number is probably understated!


----------



## afulldeck (Mar 28, 2012)

ian said:


> That number is probably understated!


If so, its heading down the same path as Facebook. I certainly wouldn't want that to be the case. It undermines good tech.


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> If so, its heading down the same path as Facebook. I certainly wouldn't want that to be the case. It undermines good tech.


I don't get it, so what, a few fraudsters use Shopify.

Did you know that all those fraudsters also use THE INTERNET!!!

They likely use SSL, and credit cards, maybe even Canada Post?
In fact they likley use the exact same stuff everyone else does.


Do you think anyone is going to stop using Ontario Cannabis Store because of this?

So why, is this a problem for Shopify?
Do you think their customers are going to jump ship to Bigcommerce or woocommerce?


----------



## james4beach (Nov 15, 2012)

What does this have to do with Facebook? There is no relationship at all. I don't see how this is an issue. Many physical businesses have switched to using Shopify. In fact I was just about to post this message when I saw this thread.

Shopify really has been offering very useful tech for small businesses. There's a local florist that I really like (I'm been a long time customer) and normally I would physically walk in, browse the selection, and order the flowers in person.

Due to covid neither I, nor do they, want me to come into the store. I already know *which businesses* I'm shopping at -- fraud is not a concern. I went to their web site, and it turns out it's a Shopify-driven order system.

I phoned the store and they said that they prefer that all orders go through the web site. Clearly it's a well operating machinery, highly integrated, and efficient for them. So after my conversation with the store for help about their products (as I would have done in person) I hung up, and am now preparing the order through the SHOP infrastructure.

That's basically "business as usual" for them, thanks to SHOP, and another $100 sale to a long time customer.

. . .

Earlier in the pandemic, I also used a BC store's web site since it was the only place I could find any masks. They were using SHOP under the hood and I didn't even notice until a small note in the email. This infrastructure appears to be really good and that's the key. Online shopping has existed for a long time, but look at how many small and medium sized businesses were able to get up and running using SHOP.


----------



## AltaRed (Jun 8, 2009)

james4beach said:


> What does this have to do with Facebook? There is no relationship at all. I don't see how this is an issue. Many physical businesses have switched to using Shopify. In fact I was just about to post this message when I saw this thread.


The OP may be referring to Facebook Marketplace which is a gong show. Shopify is not remotely close to being the same thing though I think Shopify will probably have to start? be more robust? on who uses their platform. Just like Pornhub has gotten itself unwanted attention with unverified videos, no reputable company really wants a major criminal element leveraging off their system.

Regardless, it is always 'buyer beware' no matter where one shops.


----------



## afulldeck (Mar 28, 2012)

AltaRed said:


> The OP may be referring to Facebook Marketplace which is a gong show. Shopify is not remotely close to being the same thing though I think Shopify will probably have to start? be more robust? on who uses their platform. Just like Pornhub has gotten itself unwanted attention with unverified videos, no reputable company really wants a major criminal element leveraging off their system.
> 
> Regardless, it is always 'buyer beware' no matter where one shops.


I was indeed thinking of overall fraud on facebook (information mainly), but pornhub is probably a better comparison. As you said, no reputable company wants fraud on its network it undermines confidence in the the platform tech. Would you trust a bank who distributed counterfeit bills? Shopify needs to nip this in the bud as to not be guilty by association.


----------



## jargey3000 (Jan 25, 2011)

_"Just like Pornhub has gotten itself unwanted attention with unverified videos,"

..._curious.....how DOES Pornhub verify videos anyway?......🤪


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> I was indeed thinking of overall fraud on facebook (information mainly), but pornhub is probably a better comparison. As you said, no reputable company wants fraud on its network it undermines confidence in the the platform tech. Would you trust a bank who distributed counterfeit bills? Shopify needs to nip this in the bud as to not be guilty by association.


Why?
Shopify isn't customer facing.

Do you care what OS, Webserver or Ecommerce system is in use at the stores you use?
I'd bet almost nobody cares what the behind the scenes software is, as long as the end users don't care, the customers won't care.

Honestly, which technology underlying these companies makes them suspect?
Do you think a single person said "Not buying X, because of technology Y"?





__





Site report for http://pornhub.com | Netcraft


Using results from Netcraft's internet data mining, find out the technologies and infrastructure of http://pornhub.com.




sitereport.netcraft.com








__





Site report for http://ocs.ca | Netcraft


Using results from Netcraft's internet data mining, find out the technologies and infrastructure of http://ocs.ca.




sitereport.netcraft.com








__





Site report for http://bestbuy.ca | Netcraft


Using results from Netcraft's internet data mining, find out the technologies and infrastructure of http://bestbuy.ca.




sitereport.netcraft.com






It's important that the fraud isn't' with shopify, it's with customers using their product.
That's like your drug dealer driving a Cadillac, or using an iPhone. People don't say "I don't buy Apple because drug dealers use it too"


----------



## andrewf (Mar 1, 2010)

MrMatt said:


> I don't get it, so what, a few fraudsters use Shopify.
> 
> Did you know that all those fraudsters also use THE INTERNET!!!
> 
> ...


Wait till people find out how much fraud happens on Amazon!


----------



## MrMatt (Dec 21, 2011)

andrewf said:


> Wait till people find out how much fraud happens on Amazon!


Haha, that's why they say don't buy SD cards on Amazon, the fraud levels are insane.

But there is a big difference between buying on Amazon, and buying from a store powered by shopify.
When you buy from Amazon, you know you're buying from Amazon. Most people don't know if they're buying from shopify, that's the point behind using a shopify store, instead of
Etsy, Amazon, Bestbuy, Walmart, ebay etc.


----------



## Money172375 (Jun 29, 2018)

MrMatt said:


> Haha, that's why they say don't buy SD cards on Amazon, the fraud levels are insane.
> 
> But there is a big difference between buying on Amazon, and buying from a store powered by shopify.
> When you buy from Amazon, you know you're buying from Amazon. Most people don't know if they're buying from shopify, that's the point behind using a shopify store, instead of
> Etsy, Amazon, Bestbuy, Walmart, ebay etc.


What’s the story of SD cards? I never buy them, but curious.


----------



## afulldeck (Mar 28, 2012)

MrMatt said:


> Why?
> Shopify isn't customer facing.
> 
> Do you care what OS, Webserver or Ecommerce system is in use at the stores you use?


Why yes as a matter of fact----I do. And you should too. In chain of processing events and supporting infrastructure such as A(process)->B(infrastructure)->C(process)->D(infrastructure)->E(etc) a compromise in a processing event can lead to compromise for all. It's also true that a compromise in any part of the infrastructure many lead to a compromise for all. 

The western world right now is fighting UNC2452 global intrusion campaign by the russians. The russian hackers' attack vector was through the supporting mundane software (network performance software i.e. monitoring and logging.) They simply trojanized Solarwinds network performance monitor and distributed malware (sunburst, beacon, and teardrop). So one bad apple did spoil the whole basket. Although you can't prove a negative, my bet is where there is fraud, there is more fraud of all types.......




MrMatt said:


> Honestly, which technology underlying these companies makes them suspect?
> Do you think a single person said "Not buying X, because of technology Y"?
> 
> 
> ...


They don't because they don't know. Not everyone is an IT security specialist, but companies should/must be acting on behalf of the public good and applying security controls throughout their solutions. 




MrMatt said:


> It's important that the fraud isn't' with shopify, it's with customers using their product.
> That's like your drug dealer driving a Cadillac, or using an iPhone. People don't say "I don't buy Apple because drug dealers use it too"


Are you suggesting that its okay that shopify becomes the new dark web of sales stores? Or would you rather shopify makes sure that the fraud is eliminated. If they are selling you fraudulent goods, more than likely they are stealing other things as well.


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> Are you suggesting that its okay that shopify becomes the new dark web of sales stores? Or would you rather shopify makes sure that the fraud is eliminated. If they are selling you fraudulent goods, more than likely they are stealing other things as well.


Nothing like that at all.
It's silly to think that shopify is "dark web"

I'm simply stating that while it is a concern that there is fraud on the internet, calling out shopify makes little sense at all.
They never touch the actual product, they have no ability to know if it is legitimate or not.

Would you hold woocommerce liable for fraud committed using their software? 
What about the Linux foundation? They build the OS, maybe it's their fault too.

Back to my question, would you hold Cadillac responsible for supporting drug dealers?


----------



## afulldeck (Mar 28, 2012)

MrMatt said:


> Nothing like that at all.
> It's silly to think that shopify is "dark web"
> 
> I'm simply stating that while it is a concern that there is fraud on the internet, calling out shopify makes little sense at all.
> ...


No, but I would hold Cadillac responsible if they had filled their car with fraudulent parts.......


----------



## nobleea (Oct 11, 2013)

afulldeck said:


> No, but I would hold Cadillac responsible if they had filled their car with fraudulent parts.......


Do you hold Amazon responsible for fraudulent parts? Because it's full of it.
Amazon and Shopify are similar in some respects. Amazon you are using their brand to drive sales, and Shopify you are using your brand. AMZN and SHOP just collect the money, take a cut, and give you your share. Amazon also adds on fulfilment and shipping.


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## afulldeck (Mar 28, 2012)

nobleea said:


> Do you hold Amazon responsible for fraudulent parts? Because it's full of it.
> Amazon and Shopify are similar in some respects. Amazon you are using their brand to drive sales, and Shopify you are using your brand. AMZN and SHOP just collect the money, take a cut, and give you your share. Amazon also adds on fulfilment and shipping.


Yes. I hold them responsible for fraudulent parts.


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## MrMatt (Dec 21, 2011)

nobleea said:


> Do you hold Amazon responsible for fraudulent parts? Because it's full of it.
> Amazon and Shopify are similar in some respects. Amazon you are using their brand to drive sales, and Shopify you are using your brand. AMZN and SHOP just collect the money, take a cut, and give you your share. Amazon also adds on fulfilment and shipping.


Amazon often stocks the parts in their warehouse and ships them out.

I think holding Shopify liable for fraud is like holding any of the following facilitators liable.
Your ISP
Your CC company
The shipper( UPS/CanadaPost etc)
The person who made the box it came in.
The company that made the computers, and label printers.


All Shopify does is run a piece of software for you


It's like blaming the bank because you made a dumb purchase.


----------



## afulldeck (Mar 28, 2012)

*Federal Competition Act*
Under the federal _Competition Act,_ it is against the law to make any false or misleading representation to the public for the purpose of promoting a business interest, particularly if it is done deliberately or recklessly. This _Act_ applies to advertising cases in both civil and criminal courts. If it’s not deliberate or reckless, the federal government may simply tell the business to “cease and desist,” pay a fine and publish information notices to the public telling of its errors.

The federal Competition Bureau is the independent law enforcement agency that administers the _Competition Act_. The Bureau protects consumers by promoting truth in advertising, discouraging *deceptive business practices, and investigating anti-competitive activities*.

If a consumer believes that an individual or company has contravened the _Competition Act_, they can make a complaint to the Competition Bureau which may investigate. For more information, visit competitionbureau.gc.ca.

From Dishonest businesses and misleading advertising - FREE Legal Information | Legal Line.


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> *Federal Competition Act*
> Under the federal _Competition Act,_ it is against the law to make any false or misleading representation to the public for the purpose of promoting a business interest, particularly if it is done deliberately or recklessly. This _Act_ applies to advertising cases in both civil and criminal courts. If it’s not deliberate or reckless, the federal government may simply tell the business to “cease and desist,” pay a fine and publish information notices to the public telling of its errors.
> 
> The federal Competition Bureau is the independent law enforcement agency that administers the _Competition Act_. The Bureau protects consumers by promoting truth in advertising, discouraging *deceptive business practices, and investigating anti-competitive activities*.
> ...


However Shopify doesn't engage in false of misleading representations.

They're actually very transparent on their fees and services.









Shopify Pricing - Setup and Open Your Online Store Today – Free Trial


Set up your store, pick a plan later. Try Shopify free for 3 days, no credit card required.




www.shopify.ca


----------



## afulldeck (Mar 28, 2012)

MrMatt said:


> However Shopify doesn't engage in false of misleading representations.
> 
> They're actually very transparent on their fees and services.
> 
> ...


But if they are *knowingly allowing fraud* to occur on their platform, they bare the weight of culpable negligence. They have a responsibility to the people who use their platform, and if they know about it, they need to have it eradicated. Full Stop.


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> But if they are *knowingly allowing fraud* to occur on their platform, they bare the weight of culpable negligence. They have a responsibility to the people who use their platform, and if they know about it, they need to have it eradicated. Full Stop.


They have to know about it.
Unless they are reviewing the listings they're no more liable than your ISP.

They don't supervise their customers accounts, they don't even touch the products being sold. 
Even if you allege fraud, they have no way to confirm it. 
Therefore they can't be "knowingly allowing fraud", because they don't know.


----------



## afulldeck (Mar 28, 2012)

MrMatt said:


> They have to know about it.
> Unless they are reviewing the listings they're no more liable than your ISP.
> 
> They don't supervise their customers accounts, they don't even touch the products being sold.
> ...


If the news media knows about it, Shopify does as well. It's time they pull up their Big Girl pants and protect the client base. The last thing they need is to be implicated in cover-ups. They need to get their act together...


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> If the news media knows about it, Shopify does as well. It's time they pull up their Big Girl pants and protect the client base. The last thing they need is to be implicated in cover-ups. They need to get their act together...


?? The people being defrauded aren't shopify clients or customers.

Cadillac & Lexus knows their products are used to move drugs.. time they stepped up to protect the general public.


----------



## afulldeck (Mar 28, 2012)

MrMatt said:


> ?? The people being defrauded aren't shopify clients or customers.
> 
> Cadillac & Lexus knows their products are used to move drugs.. time they stepped up to protect the general public.


The difference is that Shopify knows the clients (shop owners) because they are all being registered and need to pay for the software and service that shopify provides. And now shopify has knowledge that these shop owners are engaged in Fraud. They are walking a dangerous razor if they don't take steps to stop the fraud....no different than selling a knife to someone you know who is going to immediately use it on your friend standing beside you.


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> The difference is that Shopify knows the clients (shop owners) because they are all being registered and need to pay for the software and service that shopify provides. And now shopify has knowledge that these shop owners are engaged in Fraud. They are walking a dangerous razor if they don't take steps to stop the fraud....no different than selling a knife to someone you know who is going to immediately use it on your friend standing beside you.


If they know that the person is going to commit a crime, sure.
But if they don't know, and don't have any reason to suspect, they have no responsibility to do something.


Should your ISP block your internet access because they think you might be using your internet connection to commit a crime?
Remember, Shopify doesn't see the products being sold, they don't know if fraud is occuring or not.


The problem is you want Shopify to block their customers, based on what? Accusations of fraud?

If shopify starts blocking and shutting down the businesses of innocent customers, that would be disasterous.
1. Bad for the companies. They're shut down.
2. Bad for Shopify. Why would you want to be a shopify customer?

Quite honestly if I was a merchant, I don't care what other customers are using the same software.
I do care about the quality of the service, and if the vendor is going to arbitrarily shut down my business


I think what I'm struggling with is
1. Why do you think Shopify must police customer behaviour, but you don't seem to hold anyone else to this standard.
2. How do you think Shopify CAN police customer behaviour? What steps could they do? Is there a possible process that is reasonable to cost effectively audit them and determine if fraud is taking place? Or will it be like paypal where they automatically rule against the seller in most cases?


----------



## afulldeck (Mar 28, 2012)

MrMatt said:


> If they know that the person is going to commit a crime, sure.
> But if they don't know, and don't have any reason to suspect, they have no responsibility to do something.
> 
> Should your ISP block your internet access because they think you might be using your internet connection to commit a crime?


Yes. It may save themselves a big headache, ethically and legally. 

Most people realize that cyber crime laws across the world are implemented unevenly. That said, there is rough agreement across the western world that there is responsibilities required by the ISP with respects to Crime. They fall under two general buckets Traditional Crime and Cyber Crimes. 

Traditional Crimes (robberies, murders, abductions etc) the ISP has no choice. They will need to provide any evidence required by a presented subpoena. This could be historical data or in real-time such as monitoring broadband sessions activity. Have you tracked anyone through cell towers lately? 

Cyber crimes are the real headache and are dependant on jurisdiction. And yes there is no single definition of cyber-crime but most governments generally regard any crime committed using a computer and the Internet to *steal a person's identity* or *sell contraband* or *stalk victims* or *disrupt operations* with malevolent programs as crime. Some examples (1) So cyber attack crimes like a DDoS attack is considered “computer trespassing” (hacking) may be prosecuted as a felony. (2) cyber fraud when it targets computer users (as opposed to the computers) such as phishing, trade secrets, contraband, even national security secrets may be prosecuted (just imagine violating the ITAR regulation in the US? Gee..don't we have someone locked up in Vancouver?) (3) Illegal on-line content (Child porn) must be reported....

I trust I've made my case with respects to ISPs



MrMatt said:


> Remember, Shopify doesn't see the products being sold, they don't know if fraud is occuring or not.
> The problem is you want Shopify to block their customers, based on what? Accusations of fraud?
> 
> If shopify starts blocking and shutting down the businesses of innocent customers, that would be disasterous.
> ...


Ignorance is no excuse for violating laws. That said, Shopify has grown to the point it is now working on the world stage and like I said previously they need to pull up their Big Girl Pants. They cannot think of themselves as a simple startup of 6 working out of the Market in Ottawa anymore. They need to take the real steps of providing a platform that meets all the global security requirements, laws and regulations. It means hiring a bucketfuls of security professionals with global experience and twice as many lawyers. 



MrMatt said:


> Quite honestly if I was a merchant, I don't care what other customers are using the same software.
> I do care about the quality of the service, and if the vendor is going to arbitrarily shut down my business
> 
> I think what I'm struggling with is
> ...


So something that you may not understand is that software whether its from Microsoft, Oracle, or Shopify is a licence to use, it is not a product that you own like a car. And as a licence, it has scope and limits of use, local laws apply and responsibilities to enforce--- both as a consumer or provider. This leads to some interesting problems like the one we are talking about here. In any case, Shopify by implementing a software license agreement has the responsibility to monitor the use of its own software. That is the field they decided to play in. So they need to get cracking. 

Now if your thinking that this can only happen in software your mistaken it could happen in the automobile industry as well. Think self driving cars. Or look at the problem John Deere caused with framers, when JD claimed farmers don't own their tractors.









John Deere, Connected Products, and the Problem with Licensing


I wonder whether Deere & Company, colloquially known as John Deere, ever get bored of having to stand in as poster child for all that’s…




medium.com





MrMatt---Your not in Kansas anymore.


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> Yes. It may save themselves a big headache, ethically and legally.
> 
> Most people realize that cyber crime laws across the world are implemented unevenly. That said, there is rough agreement across the western world that there is responsibilities required by the ISP with respects to Crime. They fall under two general buckets Traditional Crime and Cyber Crimes.
> 
> ...


Not really. If they're aware of crime, they should take action.
If law enforcement requests information they should take action.

They do not currently audit customer usage to determine if it is legal.

In fact the telecommunications industry is highly regulated, and I don't believe they can monitor communication without warrants.



> Ignorance is no excuse for violating laws. That said, Shopify has grown to the point it is now working on the world stage and like I said previously they need to pull up their Big Girl Pants. They cannot think of themselves as a simple startup of 6 working out of the Market in Ottawa anymore. They need to take the real steps of providing a platform that meets all the global security requirements, laws and regulations. It means hiring a bucketfuls of security professionals with global experience and twice as many lawyers.


Ignorance of the law is no excuse.

Ignorance of a crime you are not even committing is.

I haven't heard of any security problems at Shopify, I think you're confusing issues.




> So something that you may not understand is that software whether its from Microsoft, Oracle, or Shopify is a licence to use, it is not a product that you own like a car. And as a licence, it has scope and limits of use, local laws apply and responsibilities to enforce--- both as a consumer or provider. This leads to some interesting problems like the one we are talking about here. In any case, Shopify by implementing a software license agreement has the responsibility to monitor the use of its own software. That is the field they decided to play in. So they need to get cracking.


The license is the terms under which you are allowed to make copies.
Most software has no restrictions on use.

I again ask, is the OS vendor responsible for the fraudulent acts of Shopify customers?
Why or why not?



> Now if your thinking that this can only happen in software your mistaken it could happen in the automobile industry as well. Think self driving cars. Or look at the problem John Deere caused with framers, when JD claimed farmers don't own their tractors.
> 
> 
> 
> ...


Well self driving cars is an interesting one.
Currently in most jurisdictions you can't have a motor vehicle operate on the road without a licensed driver.
For self driving vehicles, it matters what rules they put in place.

I'm very aware of the games between selling and licensing


The short answer is that if you provide a product service.
Ie shopify or a taxi ride.
You are not in any way liable for your customers actions, unless you had knowledge of the acts they were undertaking.

If shopify is aware of a customer who is committing crimes, they should act appropriately.
However there is a real concern about people making false accusations. 
Look at the problem of review bombing. It would be worse if a single disgruntled customer, or unethical competitor can shut down your whole business.

your quip about Kansas makes no sense. I'm still in the real world, not in some imaginary experience.


----------



## sags (May 15, 2010)

The "we are only providing a platform and aren't responsible for the content" excuse didn't stop the US government from putting Ross Ulbricht in prison for life.

He was the operator of Silk Road, a website that "provided a platform" for vendors and customers transacting in both legal and illegal goods.


----------



## afulldeck (Mar 28, 2012)

MrMatt said:


> your quip about Kansas makes no sense. I'm still in the real world, not in some imaginary experience.


MrMatt--This is my last comment on this thread. I'm not an amature when it comes to this topic and have plenty of scars to show for it. Believe what you want, I've given you a high level view so you can see past your current view. I have nothing to gain. I can tell you this is an uncomfortable and utterly dramatically changing space and my comments are warnings/opinions. You seem to believe nothing of significance has changed. World courts do not agree with you. @sags comment is absolutely correct and there are many more examples.


----------



## MrMatt (Dec 21, 2011)

afulldeck said:


> MrMatt--This is my last comment on this thread. I'm not an amature when it comes to this topic and have plenty of scars to show for it. Believe what you want, I've given you a high level view so you can see past your current view. I have nothing to gain. I can tell you this is an uncomfortable and utterly dramatically changing space and my comments are warnings/opinions. You seem to believe nothing of significance has changed. World courts do not agree with you. @sags comment is absolutely correct and there are many more examples.


You never confirmed if you also think the OS vendors or others should be held liable for the actions on their platform.

Nor have you stated exactly what steps Shopify should be taking. Should they respond to complaints, randomly audit their customers?


I agree, legislation and courts are erratic and unpredictable. They don't seem to have much grasp on what's going on, or following through on fundamental principles of justice.

I can agree that if someone KNOWS that someone is committing a crime using a system they have control over, they should do something.
However if they're an innocent third party, with no knowledge of the actions, they should have no responsibility.
Shopify isn't like Amazon where Amazon has physical possession of the products in question.


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## MrBlackhill (Jun 10, 2020)

The already high-valued SHOP just got a push from Facebook and Instagram.









Sell on Facebook & Instagram 2022 | Shopify


Grow your business with Facebook and Instagram - from one place




www.shopify.ca





A few months ago, I was expecting to buy SHOP at around $1,050. SHOP did drop around $1,150, but not below $1,100. Now I guess it won't ever reach that low.


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## andrewf (Mar 1, 2010)

It's good that Canada is developing a tech mini-Titan (unless you're over 1T market cap you're not really a titan I guess). Lots of Canadians getting rich off SHOP will hopefully get bootstrap many more startups without having to flee to Silicon Valley for funding.


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## james4beach (Nov 15, 2012)

I'm still not convinced on SHOP, but it's also tough to differentiate a 'bubble stock' from a company which really is rising to greatness. The market tends to happily give fast-growing companies a high multiple.

I decided to get my exposure using XIT


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## MrMatt (Dec 21, 2011)

james4beach said:


> I'm still not convinced on SHOP, but it's also tough to differentiate a 'bubble stock' from a company which really is rising to greatness. The market tends to happily give fast-growing companies a high multiple.
> 
> I decided to get my exposure using XIT


I'd try to explain a valuation case, and if it doens't add up. I don't buy.

This had me late on google, amazon, and apple.
But I also missed out on innumerable dogs.

For Shopify, how much of the market can they capture, and what is the revenue of their potential market.
How many accounts at $x/year will they have. That is your top end cap.
If you can't make a valuation work, then skip it.


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## Argonaut (Dec 7, 2010)

Every time a stock has surpassed Royal Bank's market cap on the TSX, it has retreated or outright crashed. Nortel, Blackberry, Valeant.
Will SHOP be the same story? I haven't a clue. I'm neutral on it and wouldn't take a position. They have a legitimate business capitalizing on real trends, but valuation of the stock leaves little room for any sort of setback.


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## james4beach (Nov 15, 2012)

The weights in XIC (TSX Composite) are now

7.83% SHOP
5.76% RY
5.22% TD


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## MrBlackhill (Jun 10, 2020)

MrBlackhill said:


> I want to buy SHOP but I'm currently waiting due to its valuation, even considering its revenue growth. I was waiting for $950 when it was near $1500 and dropped around $1150. Maybe I missed an opportunity. Now I'm waiting for $1050 or I'll readjust my target after earnings results.


4 months ago I was waiting for $950 and as time passed by, I actualized my target to $1050. If I actualize my target again to account those 4 months that have passed, my target would be $1200. Maybe I'll finally be able to buy.


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## james4beach (Nov 15, 2012)

Comment retracted


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## doctrine (Sep 30, 2011)

Shopify, down 30% from its all time high in February and now with a $164B market cap, has fallen behind Royal Bank, at $167B, as the most valuable company in Canada. RY just closed at a new all time high. 

The difference in valuation is of course striking, with Shopify at something like 40 times price to sales and a P/E of 400+. Royal Bank has a trailing P/E of 14, and on a more normalized basis is about P/E of 11 and forward P/E of just over 10. It's not even that expensive on fundamental metrics and that doesn't account for potential for an increasing interest yield curve.

I know comparisons are hard, and Shopify is growing fast, but Royal Bank has more 300% more net income than Shopify has revenue.


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## dotnet_nerd (Jul 1, 2009)

I'm not going to comment on the stock, but from a technological point of view. Shopify is a joke compared to a "real" eCommerce platform like Magento 2 or even WooCommerce.

Shopify is great for mom-n-pop operations that want to sell T-shirts from their basement.
Yes, they do boast some big brand users like Heinz. But these are only for direct-to-consumer. _Who buys ketchup online?_ 

No real enterprise-grade B2B organization would ever give Shopify a second glance. 

I was involved in a monolithic, multi-million dollar web project. When discussing platform options Shopify came up. The discussion lasted all of 2 minutes. We went with Magento 2 Open Source that we customized to the gills.


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## james4beach (Nov 15, 2012)

dotnet_nerd said:


> I was involved in a monolithic, multi-million dollar web project. When discussing platform options Shopify came up. The discussion lasted all of 2 minutes. We went with Magento 2 Open Source that we customized to the gills.


I'm not trying to defend SHOP's valuation here, but what you wrote here is describing the story of what makes Shopify attractive.

Yes, people who run all their own servers and like working on the guts of systems will DIY and customize everything. I understand that, but this is not the way most businesses do things. In fact, it's becoming increasingly rare to find a business that even runs their own server infrastructure! Even their own web sites.

People like to have prepackaged, hosted, ready-to-go things. I know this first hand because I provide various technical/IT services and tools, meant for self-hosted businesses and people running their own servers. It resonates with Linux people and tech gurus. But increasingly I am finding it's hard to find these kinds of people. I've also been doing market research and new product development, again targeting the "running our own servers" crowd, and this segment is rapidly disappearing.

It's really quite impressive to see how many businesses transitioned to Shopify's platform during covid. I'm not a big shopper or anything, but I have seen Shopify popping up everywhere among stores I shop at. There has clearly been a *massive adoption* of this platform at least in Canada.

And I think it's because Shopify has offered attractive capabilities, and sufficient customization, in an easy to use package. It has benefited from word of mouth. Don't underestimate the value of "easy".

Whether that's sustainable and justifies the valuation is a totally different matter, I realize.


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## m3s (Apr 3, 2010)

I'm afraid Shop's success could mirror Blackberry with things like Origin Protocol already making it look old and dusty

Centralized intermediaries are made redundant as server infrastructure is decentralized to many nodes earning small fees

Shop is already being investigated for privacy leaks. This is a problem with all centralized intermediaries exploiting data


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## Jimmy (May 19, 2017)

There are cheaper tech companies out there with better yield. Sangoma Technologies (P/S 3.4) and Converge Technologies services(1.1) are two w decent sales growth of ~40%. Their GP growth yield is 6%+ where SHOP is ~ 1%. 

SHOP is larger and a little more established though but even they admit sales growth will be slowing from 80%/yr.


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## Covariance (Oct 20, 2020)

FWIW if I was looking to value it I would hone in on customer lifetime value. In particular switching cost and fees/profitability. Also the sensitivity of SHOP revenue to transactional versus monthly subscription is a factor to consider. There is no question they have built a terrific business helping organizations rapidly and easily augment their current set-up with eCommerce sales. Looking ahead it really comes down to how profitable each marginal customer is, and whether these customers stick around or flip to a cheaper solution (in house or other service provider). Or for some, just go back to selling in their physical store/bakery/etc and fall back to a basic website +FB or GOOGL for discovery.


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## james4beach (Nov 15, 2012)

Part of the SHOP story is a bet on an Amazon takeover.

Amazon is an unstoppable monopoly which drives every competitor out of business or destroys them through acquisition. Since Shopify has grown to the point that it's not a tiny player that can just be bullied out, this puts acquisition on the table.

In a way, SHOP is a bet on the Amazon monopoly continuing on its rampage. And if Amazon was busted up by the US government (which I believe should happen) then SHOP would fall.


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## MrBlackhill (Jun 10, 2020)

Well, well. It keeps moving up.


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## MrBlackhill (Jun 10, 2020)

MrBlackhill said:


> 4 months ago I was waiting for $950 and as time passed by, I actualized my target to $1050. If I actualize my target again to account those 4 months that have passed, my target would be $1200. Maybe I'll finally be able to buy.


10 months ago I actualized my target entry point to $1200, but it never got below $1248, but yet here we are at $1282, down -43% from its ATH.

But... In the current conditions I'm still not buying even if it goes below $1200.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> Well, well. It keeps moving up.


I have good news for you then. It's currently in a 40% drawdown.

QQQ also just broke below its 200 day moving average today.

It will be pretty cool if we're on our way to another 80% tech drawdown. I think it's possible, this whole thing has been such an incredible bubble. Plus it would be nice to see the TQQQ speculators wiped out.


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## james4beach (Nov 15, 2012)

SHOP down 8%

Now it's hurting the whole TSX


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## MrBlackhill (Jun 10, 2020)

james4beach said:


> SHOP down 8%
> 
> Now it's hurting the whole TSX


I like how SHOP is down and CSU is up. Two famous tech stocks, different behaviors. I'm happy I hold CSU.


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## MrBlackhill (Jun 10, 2020)

MrBlackhill said:


> MrBlackhill said:
> 
> 
> > I'm pretty sure SHOP will drop 20-30% in the near future.
> ...


Now at $1126 and still not done falling.

Sure, if you bought at that point and sold near the highs of $2000, you did great... if you timed the market correctly.

I'm quoting my previous posts not because I correctly timed the market, no, I wasn't timing the market, I didn't know WHEN it would happen but I was expecting that it would happen and it did.

If I could time the lows and highs, I wouldn't be here because I'd be rich.

But at least, I can expect the upcoming risks.


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## doctrine (Sep 30, 2011)

I wouldn't call CSU a bargain either, but at least it is only half to 1/3rd as expensive as SHOP today on a few metrics.

Shopify could easily fall another 50% from here and still be expensive. If they start to have more mundane growth, watch out. Shopify might have $0.5 billion of operating income this year. It still has a $140 billion market cap.

I know some Shopify employees who are still millionaires, but who mostly still own all their shares and have now seen a pretty nasty haircut - $2M is do whatever you want money, $1M is still good, but what if that goes to $500k before taxes? And the entire company is working remotely - with a product that is not that difficult to duplicate (and is being duplicated), are they truly driving it ahead of the competition? All these legacy employees sitting on millions of stock that is evaporating - maybe they start to cash out and leave. Especially if competition heats up or they force everyone into an office to try and solve their problems.

Anyway, a lot of risk. Maybe they will continue to hit 50% annual revenue growth. If it drops to 20% or below though, maybe even 25%, then watch out below.


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## MrBlackhill (Jun 10, 2020)

doctrine said:


> I wouldn't call CSU a bargain either


Yes, even though I keep being happily surprised by CSU, it's the most expensive stock that I own. And based on P/B it's one of the most expensive stocks out there. I've cut my position in half last year.


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## zinfit (Mar 21, 2021)

doctrine said:


> Shopify, down 30% from its all time high in February and now with a $164B market cap, has fallen behind Royal Bank, at $167B, as the most valuable company in Canada. RY just closed at a new all time high.
> 
> The difference in valuation is of course striking, with Shopify at something like 40 times price to sales and a P/E of 400+. Royal Bank has a trailing P/E of 14, and on a more normalized basis is about P/E of 11 and forward P/E of just over 10. It's not even that expensive on fundamental metrics and that doesn't account for potential for an increasing interest yield curve.
> 
> I know comparisons are hard, and Shopify is growing fast, but Royal Bank has more 300% more net income than Shopify has revenue.


I look at something like Google . They have a forward PE of about 23, they have little debt and over a 100 billion in cash. They have great margins, serious earnings, great ROE and ROC. They have many parts that are leaders like YouTube, gmail, Google play, android, the cloud and others .


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## doctrine (Sep 30, 2011)

How does Google calculate their forward P/E? I am looking at their fundamental numbers in their financial statements and their growth trajectory. Shopify has about $4 billion in revenue in the last 4 quarters at a $110 billion market cap (all $USD), post-drop. That is a price to sales ratio of 28. If they grow revenue 40%, that is $5.6B of revenue over the next year.

To have a forward P/E of 23, they need $4.8 billion of net profit. Or almost 86% of revenue. What is going on? They have some one time gains related to equity investments which is distorting a lot of the financial sites, but that is not the underlying business, and those gains could be subject to reversion especially in a tech stock crash.

The underlying business does not generate net profit. If they could achieve a 10% net earnings margin of sales over 12 months, which they never have to date, they trade at a forward P/E of 200. I'm not saying buy or sell, I'm just observing it has a big valuation which means they have to continue to grow for years to justify the stock price. Maybe they do it. If they don't, there's a lot of air to the downside despite a 56% drop in the stock price.


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## zinfit (Mar 21, 2021)

doctrine said:


> How does Google calculate their forward P/E? I am looking at their fundamental numbers in their financial statements and their growth trajectory. Shopify has about $4 billion in revenue in the last 4 quarters at a $110 billion market cap (all $USD), post-drop. That is a price to sales ratio of 28. If they grow revenue 40%, that is $5.6B of revenue over the next year.
> 
> To have a forward P/E of 23, they need $4.8 billion of net profit. Or almost 86% of revenue. What is going on? They have some one time gains related to equity investments which is distorting a lot of the financial sites, but that is not the underlying business, and those gains could be subject to reversion especially in a tech stock crash.
> 
> The underlying business does not generate net profit. If they could achieve a 10% net earnings margin of sales over 12 months, which they never have to date, they trade at a forward P/E of 200. I'm not saying buy or sell, I'm just observing it has a big valuation which means they have to continue to grow for years to justify the stock price. Maybe they do it. If they don't, there's a lot of air to the downside despite a 56% drop in the stock price.


I just look at the numbers from Morningstar, Globe Investor and RBC. Yes these people can make mistakes but I take my chances. All I know is a lot more people I know have a lot more to to do with Google than Shop. And they are sitting on 100 billion plus in cash. To me there only enemy is governments who don't like success,


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## MrBlackhill (Jun 10, 2020)

Shopify today went down to $990 (from $1110.40) and up to $1216.76 (and closed at $1188.46).


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## Covariance (Oct 20, 2020)

Saw that. When something goes bid off like that it's very disconcerting.


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## Covariance (Oct 20, 2020)

Days like today I wish it wasn't in the index.


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## MrBlackhill (Jun 10, 2020)

Oh wow, I didn't see that! Now I'm trying to find the post that I've made in summer or fall 2020 saying that I was expecting it to go back down to $900 within the next 2 years.


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## doctrine (Sep 30, 2011)

Shopify made approximately $0 in 2021. It's still a $120B company. At least they aren't losing money, yet.


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## fstamand (Mar 24, 2015)

Any buyers? Quite the gamble... Looking at the chart it looks like the train derailed


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## doctrine (Sep 30, 2011)

Doing some math, if Shopify can increase their adjusted operating earnings 400% over 5 years, and trade at 20 times that value, the stock price has 60% further to fall. Getting into warehousing and logistics maybe increases their value proposition, but is almost guaranteed to reduce margins and returns on a pure software model. SHOP got so overvalued, but that is what stocks do. Maybe it happens again.


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## james4beach (Nov 15, 2012)

Easy come, easy go. Man the stock market is fun!!

Look at that insane, uninterrupted rally from 2016 - 2021, and then it just falls off a cliff.

Just think of how many investors must have jumped aboard this train in 2020 and 2021


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## m3s (Apr 3, 2010)

I've been saying for years SHOP looks like another BB flash in the pan to me. FinTechs will leap right past it if they don't keep developing. Typical Canadian tech resting on early success

I went risk-off tech in Sept 2021. It was a bit early but many signs were already there


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## Saintor (May 18, 2019)

m3s said:


> I've been saying for years SHOP looks like another BB flash in the pan to me. FinTechs will leap right past it if they don't keep developing. Typical Canadian tech resting on early success
> 
> I went risk-off tech in Sept 2021. It was a bit early but many signs were already there


Absolutely. I am not into pure speculation and that stock price, it is all about it. I avoid titles like this (Tesla, and others even if they making money like Amazon) like plague. Unsustainable, they will never have a reasonable P/E ratio until they massively are coming down.

EDIT: now shop.to has a decent 24.X P/E, was at 400 last year.




__





Shopify PE Ratio 2013-2022 | SHOP


<p>Current and historical p/e ratio for Shopify (SHOP) from 2013 to 2022. The price to earnings ratio is calculated by taking the latest closing price and dividing it by the most recent earnings per share (EPS) number. The PE ratio is a simple way to assess whether a stock is over or under...




www.macrotrends.net


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## m3s (Apr 3, 2010)

Saintor said:


> EDIT: now shop.to has a decent 24.X P/E, was at 400 last year.


Earnings change

SHOP earnings could dry up very quickly
TSLA earnings could increase

P/E can't be used blindly for tech


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## Saintor (May 18, 2019)

m3s said:


> P/E can't be used blindly for tech


tech is no different.


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## doctrine (Sep 30, 2011)

Saintor said:


> EDIT: now shop.to has a decent 24.X P/E, was at 400 last year.
> 
> 
> 
> ...


SHOP does not have a "decent" P/E of 24. For example, they own about 20 million shares of Affirm, which on its own allowed them to have a ~$2B one-time gain in 2021. Affirm is a money losing digital payments company whose share price is down 73% since the end of the Fiscal year, which will now be a loss of about $1.3 billion to Shopify so far in Q1, which is not yet reflected in any of these online financial sites or financial screeners.

If you invest on SHOP based on their one-time equity investments in money-losing companies, you are going to be in for quite a surprise when Q1 comes out.

Back out Affirm and other equity investments, and SHOP made nothing in 2021 off their core business and still trades at 20 times revenue. It is trading at over 200 times operating income, which takes out a bunch of expenses and adjustments. Buyer beware.

If you are going to invest in individual companies, you absolutely cannot rely on third party sites. If you are not prepared to check the financial statements yourself, you could be setting yourself up for losing a lot of money.


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## james4beach (Nov 15, 2012)

m3s said:


> I went risk-off tech in Sept 2021. It was a bit early but many signs were already there


If you're bearish on tech, you'd better get out of your crypto coins too. They're basically just another kind of momentum tech stock.


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## m3s (Apr 3, 2010)

james4beach said:


> If you're bearish on tech, you'd better get out of your crypto coins too. They're basically just another kind of momentum tech stock.


I'm not bearish on tech at all. The future will have lots of tech james

Risk off means I scaled out of risky assets in Sept. It's far more nuanced than an entire sector being "kind of momentum" or just selling everything at once because there was clearly a storm on the horizon. There are tax implications and there are high yields to collect (which actually got better)

Enjoy your bonds in a raising interest rate inflationary environment though


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## londoncalling (Sep 17, 2011)

doctrine said:


> If you are going to invest in individual companies, you absolutely cannot rely on third party sites. If you are not prepared to check the financial statements yourself, you could be setting yourself up for losing a lot of money.


I agree 100% especially for metrics like P/E D/CF etc. I used to rely on Reuters when I first started DIY as a result of laziness and lack of confidence my calculations. I will still get lazy for current holdings but not for my own research. Later on I realized that I was correct more often than not when doing the math myself and found a discrepancy with a 3rd party site. I found SEDAR is the best place to go for company docs and reports.


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## Jimmy (May 19, 2017)

A little dancing on SHOP's grave prematurely going on here. Markets are down overall in general ytd, Nasdaq down 30% from its peaks. Does anyone really think the Nasdaq /tech are not going to recover? 

Covid is ending, much of the rate hikes have been priced in for the year and inflation is going to ebb once supply chains reopen more. This Ukraine situation is going to end soon w either Russian grabbing some more land or not. Declines due to actual earnings misses are only a seemingly small part of the declines

SHOP still grew revenues 41% yoy in Q4. There is support around $1400 and many have price targets of $2,000. I don't really have a dog in this fight either way but let's get real here.


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## m3s (Apr 3, 2010)

londoncalling said:


> I agree 100% especially for metrics like P/E D/CF etc. I used to rely on Reuters when I first started DIY as a result of laziness and lack of confidence my calculations. I will still get lazy for current holdings but not for my own research. Later on I realized that I was correct more often than not when doing the math myself and found a discrepancy with a 3rd party site. I found SEDAR is the best place to go for company docs and reports.


I've found huge discrepancies when earnings are based on something that has changed significantly in value

I consider profits getting rewarded for doing that work. Others even here say it's all luck



Jimmy said:


> A little dancing on SHOP's grave prematurely going on here. Markets are down overall in general ytd, Nasdaq down 30% from its peaks. Does anyone really think the Nasdaq /tech are not going to recover?


I personally don't like SHOP I just have other tech I like better. I also don't think the sky is falling and not all tech is the same. Markets over react.

Some people on here cheer whenever the market declines because they missed the rally or something


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## Jimmy (May 19, 2017)

m3s said:


> I personally don't like SHOP I just have other tech I like better. I also don't think the sky is falling and not all tech is the same. Markets over react.
> 
> Some people on here cheer whenever the market declines because they missed the rally or something


Surprisingly SHOP is more of a blue chip tech stock just due to it's size ( like Amazon) which also causes it to get overpriced so not my favorite tech stock either. It is important to buy on the pullbacks for all these companies too.

Maybe the critics will post SHOP's rebound curve as enthusiastically.


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## doctrine (Sep 30, 2011)

Jimmy said:


> A little dancing on SHOP's grave prematurely going on here. Markets are down overall in general ytd, Nasdaq down 30% from its peaks. Does anyone really think the Nasdaq /tech are not going to recover?
> 
> Covid is ending, much of the rate hikes have been priced in for the year and inflation is going to ebb once supply chains reopen more. This Ukraine situation is going to end soon w either Russian grabbing some more land or not. Declines due to actual earnings misses are only a seemingly small part of the declines
> 
> SHOP still grew revenues 41% yoy in Q4. There is support around $1400 and many have price targets of $2,000. I don't really have a dog in this fight either way but let's get real here.


I'm not dancing on SHOP's grave, I'm just pointing out the valuation metrics, which remain extreme even after a huge 63% selloff, which only shows you how even more extreme the valuation used to be. SHOP has net cash, so they are not in financial difficulties. I just caution anyone getting involved today that Shopify must grow substantially more for many years before they can begin to reward shareholders of today at a statistically relevant level. And the company themselves have warned that growth will be more challenging. Hopefully they exceed their own expectations.


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## Jimmy (May 19, 2017)

doctrine said:


> I'm not dancing on SHOP's grave, I'm just pointing out the valuation metrics, which remain extreme even after a huge 63% selloff, which only shows you how even more extreme the valuation used to be. SHOP has net cash, so they are not in financial difficulties. I just caution anyone getting involved today that Shopify must grow substantially more for many years before they can begin to reward shareholders of today at a statistically relevant level. And the company themselves have warned that growth will be more challenging. Hopefully they exceed their own expectations.


Not sure were you are getting it was overvalued but SHOP has a P/S of just 11 and is growing sales at 40%. Even before this the P/S ratio was reasonable at 49 when sales were growing at 60% at its market peak which is better than most companies so you can't say its valuation was unreasonable. TD has a ratio of 4.5 now on 5% forward growth in comparison . Still they warned investors a year ago to expect slowing sales. You can also say anyone who bought anything even the overvalued indexes at the top can expect low rewards over the next few years not just SHOP shareholders.

Again this sell off also is minorly related to anything company specific. It is all and more to do w Russia amassing 180,000 troops on the Ukraine border , the central banks talking about 7 rate hikes and some investor panic mainly from the late market chasers.


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## doctrine (Sep 30, 2011)

Jimmy said:


> Not sure were you are getting it was overvalued but SHOP has a P/S of just 11 and is growing sales at 40%. Even before this the P/S ratio was reasonable at 49 when sales were growing at 60% at its market peak which is better than most companies so you can't say its valuation was unreasonable. TD has a ratio of 4.5 now on 5% forward growth in comparison . Still they warned investors a year ago to expect slowing sales. You can also say anyone who bought anything even the overvalued indexes at the top can expect low rewards over the next few years not just SHOP shareholders.


The observation that a P/S of 49 could be reasonable in any circumstances is quite the statement. So sales are growing - when will they make a profit? Shopify was a $250B company with no ability to generate cash. If Shopify's stock goes up 10% a year from here, which is an outstanding market return rate in line with long term averages, it will take 12 years before Shopify returns to its overheated valuation of 2 months ago.


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## Jimmy (May 19, 2017)

doctrine said:


> The observation that a P/S of 49 could be reasonable in any circumstances is quite the statement. So sales are growing - when will they make a profit? Shopify was a $250B company with no ability to generate cash. If Shopify's stock goes up 10% a year from here, which is an outstanding market return rate in line with long term averages, it will take 12 years before Shopify returns to its overheated valuation of 2 months ago.


? Again the P/S was 49 when sales were growing at 60% so again the p/s/g was similar to that of the TD bank. Not sure where you get they don't generate cash either. There NI was $2.9B on $4.6B in revenue for 2021. They are in fact very profitable. If you are too risk averse to make some large returns and just prefer low growth indexes and value stocks that is okay too.

Btw SHOP had a cagr of 58%/yr over the past 5 years even w the latest pullback so your price growth numbers are misleading and faulty too.


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## doctrine (Sep 30, 2011)

Jimmy said:


> ? Again the P/S was 49 when sales were growing at 60% so again the p/s/g was similar to that of the TD bank. Not sure where you get they don't generate cash either. There NI was $2.9B on $4.6B in revenue for 2021. They are in fact very profitable. If you are too risk averse to make some large returns and just prefer low growth indexes and value stocks that is okay too.
> 
> Btw SHOP had a cagr of 58%/yr over the past 5 years even w the latest pullback so your price growth numbers are misleading and faulty too.


I mislead nothing. I just add context to incomplete statements like *"There NI was $2.9B on $4.6B in revenue for 2021". *This absolutely could *mislead* someone into thinking Shopify actually has net earnings from their business operations. They don't. They had exactly $2.9B in equity investment gains, back that out and you see easily there is $0 profit from the operating business. And that was all non-cash gains, which have nothing to do with Shopify's revenue. Are you investing in Shopify's business, or their equity investments? And they are sitting on at least $1.3B in equity investment losses so far in Q1 based on their significant Affirm holdings, which is going to turn that net earnings story around quite quickly.


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## Jimmy (May 19, 2017)

doctrine said:


> I mislead nothing. I just add context to incomplete statements like *"There NI was $2.9B on $4.6B in revenue for 2021". *This absolutely could *mislead* someone into thinking Shopify actually has net earnings from their business operations. They don't. They had exactly $2.9B in equity investment gains, back that out and you see easily there is $0 profit from the operating business. And that was all non-cash gains, which have nothing to do with Shopify's revenue. Are you investing in Shopify's business, or their equity investments? And they are sitting on at least $1.3B in equity investment losses so far in Q1 based on their significant Affirm holdings, which is going to turn that net earnings story around quite quickly.



You said they had no ability to* 'generate cash'. *They do actually. *They in fact generated $504M in operational cash flow in 2021 . *They have generated +ve operational cash flow for the past 3 years. Their GP is 57% They are very profitable again but it could take time to recover


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## doctrine (Sep 30, 2011)

Yes, they are generating some cash flow, but still is that enough to sustain the business? After $504M in cash flow from operations, they spent $2,434M in investing activities, meaning they had to pull $1.65M from financing and the remainder from cash/operations, so they are still draining cash to grow their business. Yes, they are growing, but growth may be slowing, according to the company itself. Likely that has the most to do with the share price destruction, in addition to spending more money on warehousing and physical supply chains. Shopify is growing and has no financial issues, it's just still a very expensive company on a fundamental basis - growth may fill the valuation in a few years, but growth is not guaranteed.


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## Jimmy (May 19, 2017)

Growth may be slowing I agree. I agree they may take awhile to recover too. The stock is way down I just don't' know how much of it is systemic vs company specific issues.

The cash flows are a little more nuanced. Free cash flow is actually Operating income - cap expenditures. They had $453.6M in FCF but it could take time to get back to their peak


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## Covariance (Oct 20, 2020)

A sometimes useful way to think about a valuation is to ask "How much cashflow will this thing need to get to, and in what timeframe, to justify the current share price?" In this case, given it has non-trivial aspect of it's valuation from investments of unknown future value, I would also ask how big do they need to be/can be?


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## m3s (Apr 3, 2010)

Strike Announces Shopify Integration, Partnerships With NCR And Blackhawk Bringing Bitcoin Lighting Payments To Major Merchants

Strike, a digital payments platform built on Bitcoin’s Lightning Network, today announced an integration with e-commerce company Shopify. Now eligible U.S. Shopify merchants will be able to receive bitcoin payments from customers globally as U.S. dollars, announced Strike CEO Jack Mallers speaking at the Bitcoin 2022 conference in Miami.

A Forbes Under 30 alum, Mallers has also noted that Chicago-based Strike partnered with Blockchain 50 lister NCR NCR +0.1%, the world’s largest point-of-sale (POS) supplier, and payments firm Blackhawk.

The integration offers an alternative to traditional card networks such as Visa V -1.3% and MasterCard by leveraging the Lightning Network, a second layer built on top of the bitcoin blockchain that allows users to send or receive cryptocurrency quickly and cheaply by moving transactions off of the main blockchain. The service will be accessible to any consumer in the world with a Lightning Network-enabled wallet, including more than 70 million CashApp users, Mallers said.

The announcement underscores the growing adoption of the Lightning Network. Earlier in the day, Robinhood unveiled plans to integrate the solution into its technology stack, joining firms like cryptocurrency exchange Kraken, Twitter and Block.

On Tuesday, the California-based developer of the Lightning Network, Lightning Labs, introduced a new protocol that, it hopes, will open Lightning Network to assets other than bitcoin, including stablecoins and fiat currencies.


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## Fisherman30 (Dec 5, 2018)

Can someone explain to me how shopify is not a total bargain at the current price? I worked for 6 months (only about 1 or 2 shifts a month) at this retail store that sells things related to a hobby of mine, just as something fun to do to keep myself busy with my free time while my regular industry was slow due to covid. The owner had a shopify subscription, and I was totally blown away by the value that shopify provides, and the quality of the product they deliver. If I were opening a business of my own, there's no doubt I would be using shopify's services. It's a no-brainer as far as I'm concerned after seeing how good it was.


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## MrBlackhill (Jun 10, 2020)

It's not because the price dropped -75% that it's now a bargain. Ratios are still high. I'd wait for SHOP to drop another -50%...


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## m3s (Apr 3, 2010)

A few US websites I order online from use Shopify. You probably wouldn't even know you are paying through Shopify

While they have a lot of early success I think they are following the footsteps of Nortel and RIM where they could easily fail to not get replaced

There's a lot of FinTech in the US and the vast majority of it is not available to Canadians. Like we don't even have Apple Card yet


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## doctrine (Sep 30, 2011)

Fisherman30 said:


> Can someone explain to me how shopify is not a total bargain at the current price? I worked for 6 months (only about 1 or 2 shifts a month) at this retail store that sells things related to a hobby of mine, just as something fun to do to keep myself busy with my free time while my regular industry was slow due to covid. The owner had a shopify subscription, and I was totally blown away by the value that shopify provides, and the quality of the product they deliver. If I were opening a business of my own, there's no doubt I would be using shopify's services. It's a no-brainer as far as I'm concerned after seeing how good it was.


Just because a stock has gone down, does not mean it is a total bargain. Stocks can drop 80% and then drop another 80%. There is nothing proprietary about what Shopify does. It's a good product, but it is reproducible. And, I would add, reproducible for far less than the $60B market capitalization of the company. As others have pointed out, you wouldn't even know merchants are using it. So you wouldn't know if a merchant switched to another service, either.

Shopify is down 50% from my previous multiple-post explanation of why Shopify was not a good investment. Is it a good investment now? Well, it's still expensive. And if we are moving into a cost of living crisis of disappearing disposable income where people don't have money to spend on online merchants, and need all their income to buy food, energy, transportation, and housing, I'm not sure exactly how Shopify is going to grow into their valuation. How much of Shopify's gross revenue fall into a category of "essential" spending? And what about competitors continuing to burrow into their space? If you are satisfied that Shopify can conquer all, and you are happy to wait as much as another decade for a single dollar of shareholder returns, then maybe it is a good investment.

Shopify just dumped another $2B+ into an acquisition. Hope it works out - I reckon it is at least $1.5B of goodwill for future write-downs. Deliverr is a 5 year old company with less than $500M of invested capital purchased by Shopify for $2.1B - I am sure their founders are happy to have cashed out.


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## Covariance (Oct 20, 2020)

With the new super voting share I wonder if they will kick it out of the index.


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## MrBlackhill (Jun 10, 2020)

Shopify cuts 10% of its employees (about 1,000) due to a bad evaluation of the e-commerce growth.

Surprise, surprise.

Shopify stock sinks another -15% on the news.


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## james4beach (Nov 15, 2012)

MrBlackhill said:


> Shopify cuts 10% of its employees (about 1,000) due to a bad evaluation of the e-commerce growth.
> 
> Surprise, surprise.
> 
> Shopify stock sinks another -15% on the news.


Remember, SHOP also loves to issue stock. They've been rolling in money because of a strong appetite for tech stocks, just issuing shares endlessly for billions of $ of cashflow.

This is why I tell people that jobs in tech are *correlated* with the NASDAQ.

Now that the tech stock fun is over, and appetite for tech shares is gone, companies like SHOP cannot just issue shares to print free money any more. Suddenly, cash gets tight at the company, and remember that executives and managers have to hoard the remaining money for themselves.

That means layoffs.


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## MrMatt (Dec 21, 2011)

MrBlackhill said:


> It's not because the price dropped -75% that it's now a bargain. Ratios are still high. I'd wait for SHOP to drop another -50%...


Price/Sales is 30, and they're still not turning a profit.
Still way too expensive.


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