Shopify is an e-commerce company that provides a platform for businesses of all sizes to create an online store and sell their products. Since its founding in 2006, Shopify has grown to become a leading player in the e-commerce industry, powering over 1.7 million businesses worldwide. Its stock has also been one of the top performers in recent years, with its share price skyrocketing from $30 in 2016 to over $1,500 in 2021. In this article, we will examine the reasons why Shopify stock is a great investment opportunity.
Shopify has seen tremendous growth over the years, with its revenue growing at a compound annual growth rate of 55% from 2015 to 2020. In 2020 alone, the company’s revenue grew by 86% to $2.9 billion, driven by the accelerated shift towards e-commerce due to the COVID-19 pandemic. The company’s gross merchandise volume (GMV) also grew by 96% to $119.6 billion, with over 40% of the GMV coming from international markets.
The company’s growth is expected to continue in the coming years, with analysts forecasting a revenue growth rate of 27.9% for 2021. This growth is fueled by the increasing number of businesses adopting e-commerce, as well as Shopify’s expanding suite of products and services.
Strong Competitive Position
One of the reasons why Shopify has been so successful is its strong competitive position in the e-commerce industry. The company has a unique business model that focuses on empowering small and medium-sized businesses to compete with larger players. Shopify’s platform offers a suite of tools and services that enable businesses to create a customized online store, manage their inventory and orders, and process payments seamlessly.
Shopify’s platform is also highly scalable, allowing businesses to expand their online presence as they grow. This has helped the company attract a diverse range of businesses, from small startups to large enterprises. Additionally, Shopify’s strong brand recognition and reputation for quality have helped it differentiate itself from its competitors.
Diversification of Revenue Streams
Shopify has been successful in diversifying its revenue streams beyond its core e-commerce platform. The company has expanded into several other areas, including payment processing, shipping and logistics, and capital lending. This diversification has not only helped the company grow its revenue but has also reduced its reliance on its core e-commerce platform.
Shopify’s payment processing service, Shopify Payments, is one of the fastest-growing revenue streams for the company. In 2020, Shopify Payments processed over $20 billion in transactions, generating over $500 million in revenue for the company. Similarly, Shopify’s shipping and logistics service, Shopify Fulfillment Network, has grown rapidly, with the company expanding its network to more than 20 fulfillment centers in North America.
Innovative Product Offerings
Shopify has continued to innovate its product offerings to meet the changing needs of its customers. The company has launched several new products and services in recent years, including Shopify Capital, which provides working capital to businesses, and Shopify POS, a point-of-sale system for brick-and-mortar stores.
One of the company’s most significant innovations has been the launch of Shopify Plus, a platform designed specifically for high-volume businesses. Shopify Plus offers advanced features and customizations, including personalized checkout experiences, automation, and analytics. This has helped Shopify attract large enterprises such as PepsiCo, Nestle, and Heinz.
Shopify is a company that has experienced explosive growth in recent years, driven by its unique business model, strong competitive position, and innovative product offerings. The company has a diversified revenue stream and is well-positioned to continue its