Launched on the stock market back in 2015, Shopify (SHOP) has seen its share value rise at a meteoric pace to a standing that sees it as Canada most valuable technology company by quite a wide margin. A popular topic of discussion at dinners, cocktail parties, and in meetings, it's certainly been hard to ignore the success of this company both from a growth perspective and a stock market value standpoint. While the stock is down approximately 5% today as I write this, that is merely a blip on the radar on a relative basis.
I think though that a little bit of perspective is in order if you are planning on looking at this company, and before anyone asks, I am not giving an opinion one way or another on it. That is not what these posts are all about.
Historically, Canada has had a few notables in the "start-up to riches" category in the tech world. Let's have a look at Nortel, JDS, and more recently Research in Motion (Blackberry to some even before it was actually renamed to Blackberry). An excellent article in the Globe and Mail by David Berman and David Milstead can be found by clicking here , and discusses exactly this fact in the article. One common theme among these names is the incredible rise in enterprise value over a relatively short period of time. Another common theme is the subsequent fall in stock value as well (and in some cases, being wiped off the map). Put your hand up if you had Nortel exposure in your portfolio? Put your hand up if you still leave that very name in your statement as a reminder?
The total addressable market for e-commerce in monstrous already and we are only scratching the surface. If you look at how many traditional retailers still make the majority of their sales over the counter, there is quite a bit of room to run. New businesses can be vaulted from the realm of relative obscurity to the main stage by virtue of the simplicity that Shopify's platform provides to smaller and growing firms! The bull case is made clear in the article highlighted above.
Final thought: I think one of Shopify's biggest challenges (and there will be many with this growth story) in the future will be expanding it's platform to take advantage of its core business as a first to market company. Remain laser focused on the type of business you are, and not becoming distracted by other opportunities outside your scope of expertise (ie: the real estate trap)