This whole tech euphoria came up in the last decade as the internet spread like wildfire. A few days back, I watched a 2007 sitcom on Amazon Prime (NASDAQ:AMZN). It was shocking to see how technology has changed. Back then, Google Maps were still being polished, there were landlines, the BlackBerry messenger was new, people rented movie DVDs, and Apple iPods were the platform of choice for music.
I bet you wish that you’d invested $10,000 in these FAANG (Facebook, Apple, Amazon, Netflix, Google) stocks, as today you would be swimming in the pile of cash like Scrooge McDuck.
The secret ingredient of a trillion-dollar company
Steve Jobs said, “People don’t know what they want until you show it to them.” That is what FAANG stocks did. They empowered people with technology that people didn’t know was possible and this helped them scale at lightning speed.
The power of scalability is immense. Facebook founder Mark Elliot Zuckerberg created a social network site Facemash during his university days. The website became an overnight sensation and crashed the Harvard servers because of the traffic it attracted. The FAANG stocks have already become large and are still a must-have in your portfolio, no matter the criticism.
But if you want to convert $10,000 into $10 million in a decade, you need the next FAANG stocks in your portfolio. Then it doesn’t matter if other stocks in your portfolio fail. That’s how venture capitalists think. They only seek one Google or one Apple.
Finding the next FAANG
The stock market is not about the past, but the future. The 2030 decade will see the emergence of e-commerce, cloud platforms, and environment-friendly technology. Today, I will talk about the e-commerce wave. This market is growing at a rapid pace, and if you think Amazon is your gold ticket, think again.
E-commerce is more than just ordering online and smooth checkout. Shopify (TSX:SHOP)(NYSE:SHOP) is changing the face of e-commerce. It is bringing quality, niche, and art to the future of retail. Amazon is a customer-centric platform that sells everything from A to Z at the lowest price to the end-user. It’s a bargain hunter’s nirvana.
However, Amazon has come under fire for poaching customers of the third-party merchants on its platform and charging a high commission. The niche retailers who care about branding and quality of their products are moving to Shopify, a merchant-centric platform. The pandemic just gave a snapshot of Shopify’s ability to scale in a short period.
The secret ingredient of the next FAANG?
Shopify started by catering to small and mid-size retailers (SMBs) and has now expanded to include global brands like Heinz. It has scaled beyond consumer discretionary retailers to include grocers that have high sales volumes. This is just the beginning. The possibilities are endless.
Call it visionary, call it crazy, but Shopify CEO Tobias Lutke talked about teleportation in the October 29, 2020, earnings call. He said, “The ideal way for us to do with Shopify Fulfillment Network is employed teleportation. Like if we can figure out the physics related to that and can just make things appear on the desk right when you want them, then that would be awesome.”
If I look at the teleportation possibility from an investor lens, that will be a trillion-dollar idea if materialized. Many also thought video calling and virtual conferences were magic back in the 90s. And today, Zoom Communications has empowered the world with this magic. So maybe by 2040 or 2050, your Shopify order might be teleported?
I know Shopify’s stock valuations are crazy, but so is its growth. In my previous articles, I didn’t think Shopify stock could go beyond $1,600. But it surged past $1,850 at 92 times its sales per share. And unlike cryptocurrency and GameStop, Shopify’s valuation is backed by fundamentals. It has the power of scalability. Hence, it is a buy and a hold for the long term.