In February of this year news came that it would be partnering with the Ontario Government to handle online cannabis sales with the provincially run Ontario Cannabis Retail Corp. This is probably one of the better moves by the Government, because they are known to be literally the worst at making business decisions.
I mean, who pays $700k for a logo that looks like this? Bruh, I could have done that shit in paint. Holy Face Palm Emoji Batman.
OK, so there was some other marketing wrapped up in that deal but let’s just say that Ontario tax payers and blunt smokers alike should have been happy about the Shopify news.
Anyways, the news in Feb sent SHOP stock soaring to new highs and was baked into the price at the time.
After a recent pullback, the stock is now moving back to its all time highs. This is because there are many new articles coming out about the impact that Cannabis will have to SHOP’s bottom line. At this time, several Canadian provinces have picked Shopify to run their e-commerce websites and the company has also signed deals with marijuana companies including Canopy Growth Corp.
This has the stock up about 3% at the time of this writing.
This is an abbreviated synopses of my thesis for investing in this stock. A detailed and rigorous analysis relying on trusted information from various sources and analysis tools learned over time is always present in the decision making of these equity choices, but omitted for proprietary reasons.
Everybody knows that Cannabis is the new frontier . The once taboo “drug” has now become mainstream, and investors cannot wait to jump in to companies that produce, refine or sell it on the retail level.
Shopify is not a cheap company by any traditional metrics. We normally like to buy good companies that are growing fast when they are cheap, so caution is warranted here. However, this company is doing 9 Billion dollars in sales a quarter and is growing at 56% a year.
That’s without the company slingin’ herb on the side, so the potential for this to be a good longer term hold is quite high.
If these deals fall apart it is difficult to justify a valuation of over $90. In a bear market this kind of stock can fall to $30. The trading range on this stock is wider than my waistline after Thanksgiving Dinner.