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Shopify Is Canada’s Next $100-Billion Tech Company

By Iain ButlerStock MarketsMay 11, 2018 14:59
ca.investing.com/analysis/shopify-is-canadas-next-100billion-tech-company-200197054
Shopify Is Canada’s Next $100-Billion Tech Company
By Iain Butler   |  May 11, 2018 14:59
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How’s that for a bold prediction? Especially given that Shopify Inc (TO:SHOP) is worth less than $20 billion today.

And a $100-billion valuation would make it the third-most valuable company on the entire Toronto Stock Exchange. Right behind the Royal Bank and TD.

Heck, Shopify’s not even the biggest tech company in Canada today by market cap! That honour goes to CGI Group Inc (TO:GIBa).

The real kicker is that I detest bold predictions. After all, most of the time they turn out just plain wrong. But I feel pretty good about this one. (And so do our Stock Advisor Canada members who bought Shopify shares back in March 2016. The price then: $34.59. The price today: $187.06. I keep telling them though, we ain’t seen nothing yet!)

The reason I feel so good was on full display earlier this week. Sure, sure, Shopify’s most recent quarterly results were as impressive as anything we’ve seen out of any of the companies, Canadian or U.S., that we cover across all of Fool Canada. However, earlier this week, Shopify hosted its annual “Unite” conference in Toronto. In a nutshell, we’re not dealing with a company that provides your grandmother’s e-commerce platform. In fact, since its inception, Shopify’s been redefining what the concept of an e-commerce platform even is. This continues to this day.

You see, founder and CEO Tobi Lutke started his career intent on selling snowboards online. This was in 2004, and Lutke quickly found out that a platform upon which to build his online snowboard business simply didn’t exist. At least not for a small entrepreneur like himself. Platforms existed that were
suitable for big corporations, but they were expensive and clunky, and weren’t a fit for his purposes. So, recognizing this void, like so many other entrepreneurs, he decided to create his own platform.

It didn’t take long for Lutke to determine that, with his platform built, the real money wasn’t in selling snowboards. It was in selling this platform that he created. In 2006, just 12 years ago, Shopify was launched.

Fast forward to this week’s Unite conference. The two-day gathering was filled with reveal after reveal of new products and services that are being added to this ever-evolving platform. All geared towards making its entrepreneur merchants’ lives easier. And more successful.

Perhaps more importantly, what’s largely been a North American success story has very clearly opened its eyes to the rest of the world opportunity that exists.

This was alluded to in the company’s recent quarterly release and emphasized by some of the products and services revealed this week. And again, we’re still in the very early innings.

Shopify has very clearly gained significant favour with the entrepreneurial community. The thing is, once a business is built upon the Shopify platform, Shopify continues to reap the rewards as that business grows and thrives. Many of these businesses on the platform are young, and as they grow and mature, it’s to Shopify’s benefit. Not to mention the growing cohort of big business that is climbing onto to Shopify’s “Plus” platform. Recent additions include: The UGG Company out of Australia, LeSportsac, Monster Electronics, HarperCollins U.K., Vega, Colgate-Palmolive, and some great new shops from the likes of Nestle and PepsiCo (NASDAQ:PEP), including the “Smile With Lay's” shop, where consumers can customize a bag of Lay's potato
chips and put their face on it.

What we’ve witnessed, and executives made this clear at Unite, is a relatively simple e-commerce platform that has morphed into full blown “retail operating system.” And in case you didn’t know, retail is a pretty big business. Especially when you consider Shopify’s business is effectively borderless.

Pretty big? How about $22 TRILLION big!! With e-commerce alone accounting for $1.3 trillion. Yes, trillion – with a “T”.

Granted, my prediction off the top that Shopify will some day be worth $100 billion seems bold given the current context mentioned. In reality though, given the opportunity in front of the company, and even more importantly, its hard charging pursuit of that opportunity, $100 billion valuation might well end up being conservative. Time will tell.

If you own Shopify, or have even considered it, you’re going to benefit by following along with us as this company becomes ever more valuable.

Again - and I’m hammering this home - It’s early innings. If you don’t own shares and think you’ve missed the boat – you haven’t. Join us and let’s grab some front row seats to see Shopify provide the life altering returns that we so crave!

Iain Butler, CFA
Chief Investment Advisor, Motley Fool Canada

Disclosure: Iain Butler owns shares of Shopify. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Shopify.

Shopify Is Canada’s Next $100-Billion Tech Company
 

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Shopify Is Canada’s Next $100-Billion Tech Company

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