Could Shopify (TSX:SHOP) Stock Still Be a Millionaire Maker?

Many investors became millionaires through Shopify stock. However, it may not be a millionaire-maker like before if the growth pace of e-commerce tapers off due to the vaccine rollout and reopening of economies.

| More on:
question marks written reminders tickets

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

May 21, 2021, marks the fifth year of Shopify’s (TSX:SHOP)(NYSE:SHOP) market debut on the Toronto Stock Exchange and New York Stock Exchange. If you were a regular TSX investor who bought 679 shares worth $21,218.75 then, you’d be a certified millionaire five years later with $1,000,696.62 in the bank.

On Friday, May 21, 2021, Shopify traded at $1,473.78 per share, or 4,616% higher than $31.25 on May 15, 2015. I suppose many Canadians became millionaires, because they believed in the growth potential of the e-commerce platform.

TSX’s largest publicly listed company by market cap ($183.31 billion) started as an online store for snowboarding equipment. Given the many business improvements since half a decade ago, is Shopify still a millionaire maker if you were to invest today?

Phenomenon in waiting

Shopify had humble beginnings and started as Snowdevil in 2004. The founders used Ruby on Rails, an open-source web application framework, to set up the online store to showcase snowboarding equipment. Six years later, in 2010, the company launched a Build-A-Business competition, where participants created businesses using the Shopify App Store.

After three years, Shopify Payments came into the picture. Merchants can accept credit cards without a third-party payment gateway involvement. Because of the successful launch of its iPad-centric POS system, which accepted credit card payments, Shopify received $100 million in Series C funding on year-end 2013.

The stage was ready for Shopify to go public simultaneously in the U.S. and Canada stock exchanges on May 15, 2021. What made the tech stock more appealing was the decision of to close its Amazon Webstore services for merchants in September 2015. The American multinational tech company picked Shopify as the preferred migration provider.

TSX 30 List

The TSX introduced the TSX 30 on September 26, 2019. It features the 30 top-performing stocks over a three-year period. Shopify was in the number two spot. A year later, in the second edition of the flagship program, the e-commerce platform ranked first with its 1,043% three-year performance. Ballard Power Systems was a far second with 459%.

Over the last three years, Shopify’s average annual revenue growth is 63.9%. In 2020, the year-over-year growth was 85.63%. For the first time since 2014, the company reported profits for the full year 2020. Shopify’s net income was US$319.5 million on US$2.9 billion revenues.

Growing partnerships

Shopify is not only signing small- and medium-sized online businesses; it’s supporting its business partners as well. Global-E Online debuted on the NASDAQ on May 12, 2021. Shopify bought a US$193 million pre-IPO stake in the US$4.47 billion direct-to-consumer cross-border e-commerce platform.

In early 2021, Shopify earned nearly $2 billion from Affirm’s IPO, also on the NASDAQ. The latter is the partner in Shop Pay Installments, a “buy now, pay later” financing service for U.S. merchants. Shopify has an 8% ownership stake in the financial technology company.

Normalized growth pace

Shopify expects consumer spending to rotate back to offline retail and services once the economic environment improves due to the ongoing vaccination campaigns. It also anticipates a normalized growth pace in e-commerce activities.

Still, management sees revenue growing rapidly in 2021, although at a lower rate than in 2020. Investors would have to gauge whether Shopify is worth buying at its current share price based on the business outlook.

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 Christopher Liew 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: short January 2023 $1160 calls on Shopify, long January 2022 $1920 calls on Amazon, long January 2023 $1140 calls on Shopify, and short January 2022 $1940 calls on Amazon.

More on Tech Stocks

clock time
Tech Stocks

Now’s the Time to Load Up the TFSA With These 2 Top TSX Stocks

Here are two top TSX stocks that long-term growth investors may not want to give up on, especially at these…

Read more »

shopping online, e-commerce
Tech Stocks

Shopify (TSX:SHOP) Stock Recovers 30% From its 3-Year Lows: Should You Buy?

Shopify stock: Should you buy the dip or wait for more weakness?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

What Market Correction? 2 High-Growth Tech Stocks That Are on the Rise

I don’t think it will be long before these two Canadian tech stocks are back to delivering market-crushing returns.

Read more »

grow dividends
Tech Stocks

Why Kinaxis (TSX:KXS) Stock Jumped 14% Last Week

Kinaxis Inc. (TSX:KXS) stock popped over the past week after adding yet another big company to its impressive stable.

Read more »

potted green plant grows up in arrow shape
Tech Stocks

TFSA Investors: Double Your Investments With These 3 Top Growth Stocks

Despite the volatility, I am bullish on these three stocks, given their solid growth potential.

Read more »

Arrow descending on a graph
Tech Stocks

2 Industries That Saw the Worst Decline Last Month

The TSX has been declining at a sharp angle since the beginning of June. And two industries (crypto and cannabis)…

Read more »

Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »