I wouldn’t be the first to tell you that Shopify (TSX:SHOP)(NYSE:SHOP) is rapidly catching up with Amazon (NASDAQ:AMZN). The similarities between the two businesses are striking, and the former is growing much faster than the latter. In 2020, Shopify grew its revenue by 86%, while Amazon “only” grew by 38%. I put “only” in scare quotes, because 38% is a phenomenal revenue-growth rate for a mature company, but it’s nothing compared to Shopify’s pace. At this rate, Shopify could easily become the “next Amazon,” taking over a huge swatch of the global e-commerce industry in the process. And if you don’t believe me, there’s a superstar investor who thinks the same thing.
Cathie Wood says SHOP is the next AMZN
Cathie Wood was the financial world’s rising star of 2020. Her flagship fund ARKK delivered a 150% return that year, easily beating all relevant benchmarks. Recently, Wood started adding SHOP to her portfolios. And she’s joined the growing chorus of people who think that SHOP could become the next Amazon.
In an interview with BNN Bloomberg, Wood said, “We’re trying to figure out how Amazon is going to deal with this notion of individuals seeing something on Instagram or elsewhere on Facebook or on Twitter, or on Snap and just buying there… that’s a Shopify-enabled commerce opportunity and we think it’s going to be big.”
Wood is getting at a very important point here: Amazon may have the advantage of a built-in storefront with massive traffic. But what about sales originating from social media? Many brands that use Facebook, Twitter, and Instagram for marketing host their stores on Shopify. Facebook even recently partnered with Shopify, helping businesses build branded Facebook stores. It’s a tremendous growth area. And with enough luck, it could eventually become as big as Amazon itself.
Possible price target?
So far, Cathie Wood hasn’t revealed her price target for Shopify.
But given that she generally aims to “knock it out of the park” rather than mitigate risk, it seems fair to assume she’s looking to double her money — or more.
Given today’s prices, that would suggest Wood is aiming to get to $2,300.
Of course, this is all speculation. Nobody really knows where Cathie Wood is expecting SHOP to go. But given her investment strategy, there is zero doubt that she thinks SHOP has “multi-bagger” potential.
Over the years, Shopify has defied all expectations, both as a stock and as a business. Reaching $3 billion in annual revenue and rising over 3,000% in the markets, it has soared to heights nobody anticipated.
Today the question is, could it soar higher?
The answer, most likely, is “yes.”
Shopify is perfectly positioned to profit from the trend of social/e-commerce integration. And it already has partnerships that give it an advantage in that space. Without a doubt, it has the potential to become the next Amazon or, perhaps, something even better.
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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. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Fool contributor Andrew Button owns shares of Facebook. David Gardner owns shares of Amazon and Facebook. Tom Gardner owns shares of Facebook, Shopify, and Twitter. The Motley Fool owns shares of and recommends Amazon, Facebook, Shopify, Shopify, and Twitter and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon.