Drone Delivery Canada Stock: The Next Shopify?

Shopify Inc. (TSX:SHOP)(NYSE:SHOP) has made fortunes since 2015. Does this Drone Delivery stock have similar potential?

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Canada’s technology sector has delivered some breakout stocks over the past year. Every Canadian investors is probably familiar with the Shopify (TSX:SHOP)(NYSE:SHOP) success story at this point. Drone Delivery Canada (TSXV:FLT) is a Vaughan-based company that designs, develops, and implements commercial drone-based logistics systems in Canada. Shares of Drone Delivery have climbed 151% in 2021 at the time of this writing. Could this stock make fortunes the same way Shopify has since its TSX debut in 2015?

Today, I want to explore that possibility.

What has powered Shopify over the last half decade?

Shopify stock has increased 147% year over year as of late morning trading on February 19. The stock sank below the $500 mark during the March 2020 market pullback. Investors who jumped in on this dip have been richly rewarded as the market has rebounded during the pandemic. Better yet, the e-commerce space has erupted during this crisis, fuelling Shopify’s continued rise since the spring of 2020.

The mass closure of brick-and-mortar stores during the pandemic has forced even more consumers to digital spaces. This transition was illustrated during the Black Friday and Cyber Monday shopping weekend. Shopify achieved $5.1 billion in worldwide sales over the course of the BFCM spree. Total sales jumped 76% to $2.9 billion. The company had already passed the previous year’s record by Saturday that weekend.

In September 2020, I’d discussed why investors need to stick with the e-commerce space. However, Drone Delivery’s market also holds huge promise over the course of this decade.

This trend can fuel Drone Delivery in the years ahead

The pressure on the delivery service has been immense during the pandemic. Drone delivery services have entered the fray to meet this demand. The increase in drone fleets over the next decade may see this technology match and eventually surpass human delivery.

In late 2020, Facts and Factors released a report on the drone package delivery market. The report said that this market was worth roughly US$530 million in 2019. F&F estimates that this market will grow to $6.05 billion by 2026. That would represent a terrific compound annual growth rate (CAGR) of 45% from 2020 through 2027. Canadian investors should be eager to get in on this market.

Back in July 2019, I’d looked at Drone Delivery Canada as a top micro-cap stock on the TSX. Its shares have roughly doubled since the publication of that piece. Still, investors should be cautious with this red-hot tech stock. In its most recent earnings report, Drone Delivery Canada delivered revenue of $36K and a GAAP net loss of $3.77 million. Revenues were up marginally from the prior year, while the company expanded its net loss from 2019.

While this stock certainly has upside, investors should await more progress before staking too much in Drone Delivery Canada. Shopify, on the other hand, has more than proven its growth potential since its debut. Still, Drone Delivery is well worth monitoring in the months ahead.

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.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Shopify and Shopify.

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