Shopify (TSX:SHOP) Inc .'s (NYSE:SHOP) share price experienced significant influence from institutional investors who hold 64% of the company's stake, as reported on Thursday. The top 25 shareholders have consolidated 48% of the business, a move that has contributed to Shopify's recent historic growth trajectory.
The company's inclusion in a major index has drawn the attention of institutional investors, despite the potential risks of a 'crowded trade.' However, Shopify's impressive growth history appears to mitigate these risks. Notably, hedge funds have minimal ownership in contrast to Capital Research and Management Company's leading 7.0% stake.
On another note, Shopify's CEO, Tobias Lütke, holds a noteworthy 6.2% shareholding, which underscores his dual role in both management and investment. This significant stake by the CEO is seen as an affirmation of his confidence in the company's direction and future prospects.
Last week, Shopify achieved a market capitalization of US$79 billion which boosted the one-year return to shareholders to an impressive 103%. This remarkable return reflects the extent of shareholder consolidation and the company's successful performance in the market.
InvestingPro Insights
According to InvestingPro real-time data, Shopify's revenue growth has been accelerating, a fact that aligns with the company's recent historic growth trajectory noted in the article. This growth, along with the company's strong position in the IT Services industry, has likely contributed to the significant influence of institutional investors.
InvestingPro Tips also highlight that Shopify holds more cash than debt on its balance sheet and its liquid assets exceed short term obligations. This financial stability might be a factor in the CEO's confidence in the company's direction and future prospects, as evidenced by his noteworthy 6.2% shareholding.
However, potential investors should be aware of the company's stock price volatility, as pointed out by InvestingPro. This could be related to the high revenue valuation multiple and high Price / Book multiple at which the company is currently trading.
For more insight and additional tips, InvestingPro features 15 tips in total for Shopify, offering a comprehensive analysis of the company's financial health and market performance.
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