Shopify (TSX:SHOP)(NYSE:SHOP) debuted on the TSX back in May 2015. Since its debut, Shopify has proven to be one of the most explosive technology stocks in the North American market. The stock last closed at $1,512.66 at the time of this writing. Today, I want to discuss why and how the stock can get to the $2,000 mark before the end of 2021. Let’s dive in.
Why Shopify is the ultimate Canadian technology stock
In April 2019, I’d suggested that Shopify could develop into the Canadian Amazon. Both companies have been dominant in the e-commerce space, albeit in very different ways. Shopify provides a cloud-based multi-channel commerce platform for small- and medium-sized businesses in Canada and around the world. Merchants who want to establish themselves in the online shopping space are provided with industry-leading tools when they sign up for Shopify’s platform.
The growth of e-commerce has played a huge role in Shopify’s growth and in garnering interest for the stock across North America. Its shares have climbed 169% year-over-year as of close on January 12. In the spring of 2020, Grand View Research released a market report on the global e-commerce market. It projected that the global e-commerce market would deliver a compound annual growth rate (CAGR) of 14.7% from 2020 through 2027.
Where is the company heading this decade?
Shopify’s bright future has not been dimmed by the COVID-19 pandemic. On the contrary, the pandemic has accelerated trends in retail that have been beneficial to Shopify and others in the e-commerce space. Restrictions and lockdowns across the developed world have driven even more consumers away from traditional retail spaces and into the arms of online platforms.
Digital shopping soared in 2020. This was especially evident during the Black Friday-Cyber Monday shopping weekend. Shopify’s merchants collectively raked in $5.1 billion in sales from November 27 to November 30, up 76% from totals in 2019. The company’s merchants reached 2019 totals by the late afternoon on Saturday.
While these trends have benefited Shopify, the company is also driven to expand its user base. It realized that it had to branch out from its dominant English-speaking merchant fleet. By the late 2010s, Shopify affirmed that it was committed to an international push.
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Should you buy the stock today?
Shopify dipped below the $500 mark during the March market bloodbath in 2020. Investors who jumped on that dip should be patting themselves on the back. Shopify possesses an excellent balance sheet and mouth-watering growth potential, but it is mighty pricey right now. Moreover, North American stocks look broadly overpriced in a volatile economic and political environment. Still, we’re not looking to time the market here.
Rather, those who want in on Shopify’s promise should consider implementing a dollar-cost averaging (DCA) strategy. That involves purchasing Shopify stock at regular intervals from here on out, which allows investors to take advantage of its momentum while shielding themselves against potential volatility. Moreover, those who remain relatively liquid can look to make a bigger purchase in the event of a significant pullback.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Amazon, Shopify, and Shopify and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.