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Shopify stock trading close to all time high – more to come?


With thousands of new sellers joining its platform, Shopify (NYSE:SHOP) seems to have been one of the stand out beneficiaries of the pandemic. Social distancing, remote work, job losses and a tough economic situations seem to have combined to bring thousands onto the platform. The Shopify stock price has risen from USD 1047 on 13 May to hit USD 1480 at time of writing.

The company’s worth has now surpassed such brands as Wells Fargo (WFC) that has a market cap of $172.57 billion, UPS (UPS), with a market cap of $172.16 billion, and McDonald’s (MCD) ($171.33 billion). The Canadian e-commerce giant now ranks higher than BHP Group (BHP), Texas Instruments (TXN), Accenture (ACN), and more, and keeps improving its position in the global ranking of TOP 100 companies by market capitalisation daily.

Shopify booms as consumer behaviour changes amid the pandemic

Pandemic-induced social distancing, remote work, job losses, and a tough economic situation nudged thousands of new sellers to Shopify. The number of new stores grew by 62% by May 2020, becoming a new source of income for many and boosting annual Shopify revenue by 86% in 2020.

Since the demand for online shopping has significantly increased, nearly 37% of Shopify store owners have experienced a boost in sales and managed to grow their revenue by at least 40% since the outbreak of COVID-19, a HelpCenter survey has found.

“The surge in the Shopify market capitalisation could have been anticipated.,” says Ernestas Petkevicius, co-founder of HelpCenter. “The direct-to-consumer economy is here to stay and owning a small or medium online business is very appealing to many wannabe entrepreneurs. This trend of remote work and working from anywhere will benefit Shopify for many years ahead, therefore, we should witness the rapid growth of the Canadian juggernaut and maybe even a competition with Amazon in the future. On the other hand, the trend is to grow your business on Shopify and also Amazon. So this potentially is benefiting all market participants of the so-called new economy.”

Shopping apps are already being used by 78% of users globally, ranking second in popularity after music apps. As e-commerce sales are expected to keep the same pace, Shopify will likely continue to attract various businesses aiming to go online, since it offers a highly scalable, easy to get started solution at affordable rates.

Shopify stock lining up on all time high

The company has been actively helping smaller businesses to adapt to this new reality. Shopify has already implemented such changes as making gift cards available to all sellers, facilitated curb side pickups, and introduced a consumer-facing shopping assistant app.

Shopify has also invested $350 million US dollars into a payments platform – Stripe – that helps to accept payments and manage online businesses. These ongoing improvements are focused on helping merchants to “compete in any retail environment and engage directly with their customers wherever they are.”

The Shopify share price has had its ups and downs in the course of the last year. It remained under the USD 1200 level until relatively recently – since January we have seen a couple of big spikes in investor interest, last time taking the stock to nearly USD 1600. The stock is trading close to its ATH and we don’t see any reason why it can’t break USD 1600 in the next couple of weeks.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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