Shopify (TSX:SHOP) is an e-commerce platform offering two segments of operations: subscription solutions and merchant solutions to small- and medium-sized businesses. In 2023, Shopify provided investors with significant capital appreciation, more than doubling over the course of the year. This performance made SHOP stock one of the three top-performing TSX Composite components and a top growth stock to consider in the coming years.
Of course, I don’t have a crystal ball, and I can’t predict exactly where Shopify will trend over the coming three, five, or 10 years. However, a scenario I think is likely to play out is some near-term volatility alongside longer-term growth.
Here’s why I think Shopify remains a stock that long-term growth investors should focus on holding for a decade rather than a three-year span, particularly given the uncertainty in the market right now.
Shopify’s current positioning
Before forecasting Shopify’s stock in the upcoming years, it is significant to understand its current position. Over the past few years, this Canadian-based company has performed extraordinarily well. Shopify has now established itself as one of the most trusted e-commerce platforms, providing services to businesses globally and enhancing their online presence.
Even facing competition from industry giants like Amazon and other new players, Shopify holds a special place in the market. The company’s business model, focused on democratizing the world of e-commerce, is one that many investors can get behind. Indeed, those who believe in the long-term secular trends supporting e-commerce may view Shopify stock as a top way to play this space.
Short- and medium-term growth potential remains intact
There are certainly no guarantees when it comes to any high-growth stock in this market. Shopify is no exception, with a medium-term growth outlook that should remain robust.
However, economic headwinds could pick up, and there’s always the possibility that growth will continue to slow as the company matures. In fact, over the very long term, investors can expect this to be the cast.
That said, I think Shopify’s near- and medium-term growth outlooks may be more insulated than many of its peers. Much of this thesis has to do with the company’s moat around its core business and its leading position in a high-growth sector driven by secular tailwinds.
So long as e-commerce adoption continues to pick up, I think Shopify remains a top option in this space. The company forecasts its revenue will grow at an average annual compounded rate of around 10% through 2028. Finding that kind of growth in a company that’s proven to be as profitable, as Shopify isn’t that easy in this environment.
Long-term growth drivers remain intact
All the aforementioned bullish catalysts that should drive Shopify over the near and medium term hold true for the longer-term picture. In fact, I’m most bullish about Shopify stock over a 10-year period rather than a three or five-year window. Anything can happen over the course of just a few years, but the longer large-cap tech stocks like Shopify have to continue to dominate their respective sectors, the greater the probability of success.