Shopify tops $1 billion in revenue for the first timeDespite blowing past expectations and topping $1 billion in revenue for the first time, shares of Shopify slipped on Wednesday as investors worried about how the e-commerce giant will fare post-COVID.
Shopify started the week with a bang after opening at its highest price ever, but prices slipped on Wednesday despite earnings that blew past expectations. The e-commerce behemoth reported earnings per share of $2.24 in the quarter, up 113% from the year before and impressively outpacing expectations of $0.96 per share. Revenue came in at $1.12 billion, up 57% from the same period a year before and well ahead of expectations of $1.04 billion, and also marking the first time that Shopify has topped $1 billion in revenue in its history. The success is thanks to sustained strength in online spending as the economy rebounds from the pandemic.
said Amy Shapero, Shopify’s CFO.
The stock’s reaction wasn’t as upbeat as its earnings, and prices slipped 1.10% on Wednesday and a further 0.85% on Thursday as investors worry about what next quarter holds as online shopping sees a slowdown amid re-opening economies.
Shopify is Canada’s most valuable publicly traded company and its favourite homegrown tech success story, and has a market cap of over $191 billion while it supports over a million businesses around the world. The stock is up just under 200% since the pandemic hit in March last year.
Shopify slays in Q1Shopify soars over 11% after its Q1 earnings beat previous estimates into pulp, reporting a revenue growth of more than 100%. Killing it.
Shopify crushed expectations with its Q1 numbers, reporting $988.6 million in revenue – up a massive 110% from the same period the year before and leaving estimates of $862.7 million in the dust. The company reported adjusted earnings per share of $2.01, triple Wall Street’s estimations of 75 cents per share, boosted by $1.30 in unrealized gains from its investment in Affirm, an online payment company that went public in January. Guidance-wise though, Shopify cautioned that growth could slow as the pandemic eases.
Shopify said in its earnings release.
Shopify exodusShopify bounces back after losing 5% yesterday following the announcement that three of its senior execs will be leaving the company. Shares recover 2.41%.
Tobi Lutke, the CEO and Founder of the e-commerce platform, announced in a blog post that the Chief Talent Officer, Chief Legal Officer, and Chief Technology Officer will all transition out of their positions; adding that the trio “have been “spectacular and deserve to take a bow”.
The company didn't give any reason for the departure, simply saying it was best for both them and the firm. The founder didn’t give any indication of who might be taking over the positions, but noted that “we have a phenomenally strong bench of leaders who will now step up into larger roles” so perhaps they’ll be looking internally to replace the three. Craig Miller, Chief Product Officer, also left the company in September last year after nine years and Lutke took on his position in addition to CEO.
Shopify is Canada’s most valuable publicly traded company and its favourite homegrown tech success story, and has a market cap of around $154 billion while it supports over a million businesses around the world. Shares have shot up 137% in the last year, but is down 1.7% in the first quarter of the year as investors cash in on those pandemic highs.
An analyst at Summit Insights Group, Jonathan Kees, called the timing of the departures "a little alarming" but said that the specific roles make it less worrying as those leaving are in "more back-office roles." Analyst Tom Forte added that they
Shopify posts strong FY and Q4 resultsShopify reports another great year on the back of pandemic sales, driven by a whopping 99% jump in Gross Merchant Volume (GMV), up $20.5bn to $41.1bn for Q4.
Revenue for the quarter was $977.7 million, up 94% from the previous year and well ahead of Wall Street estimates, which stood at $910.2 million. Adjusted profits were $1.58 a share, also ahead of Wall Street expectations of $1.25 a share. Total revenue for the full year 2020 was $2,929.5 million, an 86% increase over 2019. GMV for 2020 was $119.6 billion, an increase of 96% over 2019.
Q4 net income was $123.9 million, or $0.99 per diluted share, compared with a net income of $0.8 million, or $0.01 per diluted share, for the fourth quarter of 2019. Net income for the full year of 2020 was $319.5 million, or $2.59 per diluted share, compared with a net loss of $124.8 million, or $1.10 per basic and diluted share, for 2019.
Highlights of the year included the Black Friday weekend, which saw sales on Shopify’s platform reach more than $5.1 billion from the start of Black Friday in New Zealand, through the end of Cyber Monday in California, compared to $2.9 billion in GMV for the global Black Friday Cyber Monday period in 2019. Shopify also offset all carbon emissions from the delivery of every order placed on its platform during the weekend, resulting in nearly 62,000 tonnes of carbon emissions offset.
Shopify expands on social mediaGood news, influencers! Shopify has expanded its Shop Pay payment to all Shopify merchants selling on Facebook and Instagram. The market loves the news, and stock jumps almost 7%.
With the new integration, shoppers on Instagram and Facebook can access Shop Pay as a payment option in the Facebook Pay menu. They can not only track their orders but they can also see the carbon emissions offset from what they purchased (Shop Pay offsets 100% of the delivery emissions for every order, because it says 53% of its shoppers want sustainable products.)
Shop Pay also offers encrypted one-click payments, a 70% faster checkout experience, and fewer forms to fill out. And it's popular. In 2020 buyers completed more than 137 million orders via Shop Pay, which has seen $20 billion in cumulative merchandise volume since its launch in 2017.
“People are embracing social platforms not only for connection but for commerce,” said Carl Rivera, General Manager of the Shop App at Shopify. “Making Shop Pay available outside of Shopify for the first time means even more shoppers can use the fastest and best checkout on the Internet. And there’s more to come: we’ll continue to work with Facebook to bring a number of Shopify services and products to these platforms to make social selling so much better.”
The news cemented a strong month for Shopify, which had already rallied 22% in the first week of February. The Shop Pay news pushed it even higher, jumping another 6.53% to hit $1499.75 by February 10.
Shopify announces earnings announcementShopify says that it's going to release Q4 earnings on February 17, 2021. Despite 2020 being a pretty good year for the company, the news doesn't bring a great response from the market, and stock slides by almost 6%.
The lack of confidence is odd, because Shopify is actually doing pretty great. The stock grew by over 150% in 2020, and its financials are looking pretty healthy too. The last two quarters have seen strong year-on-year revenue growth, and in Q3 it made a $191 million profit, compared to a $78 million loss in Q3 2019. Analysts are pretty bullish on the stock for 2021, despite the recent volatility.
Engineering team to doubleShopify hires a new VP of Engineering and announces plans to double its engineering team with the hire of over 2,000 new employees. Many of these are likely to be in Ireland, its largest cluster of staff outside the home base of Canada.
On its website, Shopify said it was looking for people with experience in front and back end development, data, mobile and infrastructure work.
Cathy Polinsky also joined the firm as its new Engineering VP. She was previously Chief Technology Officer at online personal styling service Stitch Fix and has also held senior roles at Salesforce, Oracle and Yahoo. “Shopify’s mission to make commerce better for everyone is incredibly inspiring, and it’s what attracted me most to the role," she said.
Rapid growth exposes Shopify to fraudstersIt's not great news to end the year with, as new analysis from ecommerce authentication service FakeSpot finds that over a fifth of Shopify sites pose a risk to their customers.
Fakespot analyzed 124,000 Shopify sites, and found that around 26,000 were
"related to fraudulent practices" – including 40% described as "problematic sellers" and 28% possible scam stores.
“We recognise there will be those — however few they may be relative to our base of more than one million merchants — that may abuse our service, and we take this matter seriously,” said Shopify, which has employed “multiple teams” to address what it calls "an industry-wide problem."
The problem is that while centralized sites like Amazon can operate a relatively robust system of reviews that allow customers to see at a glance what they're getting into, the fragmented nature of Shopify (and its "anti-Amazon" strategy) means that it can be difficult to separate legit sellers from dodgy ones.
The market did not like the news at all, and the stock dropped by almost 7% the day after it broke, falling to $1,197.96 on December 23.
Arming the rebelsShopify has often been labeled the young disruptor compared to its giant rival, with an approach to business that champions independent brands and small businesses. But in a Fortune podcast in December, Shopify Plus General Manager Loren Padelford debunks the myth.
"I don't consider us the anti-Amazon, I think that's a media narrative,” said Padelford. She did admit, though, that: “We want merchants to be front and center… That's a worldview difference." Way to be tactful, Loren.
However, it doesn’t quite tally with what Founder and CEO Toby Lutke said back in 2019. When asked in a Twitter Q&A if Shopify was going to be the next Amazon (AMZN), he was pretty clear on the subject, saying: “Amazon is trying to build an empire and Shopify is trying to arm the rebels.”
$5bn Black FridayThe pandemic might be receding, but Shopify is still winning the retail game. In this year’s Black Friday/Cyber Monday weekend (November 27-30 2020) the firm sees sales of over $5bn from more than one million Shopify-powered brands around the world. The market likes it too – the stock rises 5.41% over the weekend to close at $1,090.38 on the Monday.
It looks like customers are voting with their wallets, and seeking to support smaller and independent brands (which Shopify has historically championed) over the Amazonian giants. In the week leading up to Cyber Monday, from November 23 through November 30, sales increased by 84% from 2019 – a pretty strong result.
“This has been a transformative year for commerce globally,” said Harley Finkelstein, President of Shopify. “The record sales we saw on Shopify over Black Friday/Cyber Monday weekend demonstrate the power of the independent and direct-to-consumer businesses on our platform. With the center of gravity in commerce shifting from in-store to online, the pandemic has accelerated a change we have long anticipated. This multichannel shopping phenomenon is the blueprint for the future of retail – and we couldn’t be more excited by it.”
Vaccine hopesEveryone wants a vaccine – and it looks like one is finally be on the way as drugs company Pfizer (PFIZER) claims on November 9 that its treatment is (in theory) 90% effective against the coronavirus. This poses a threat to stay-at-home stocks and Shopify shares have a turbulent few days. The stock declines by 13.6% on November 9 to $902.60 and falls another 2.3% to $885 by November 10 before rising 7% to $947 on November 11.
Questions had already been raised by analysts about how long the momentum can be maintained for Shopify’s stock. It had been sitting pretty at above $1,000 for weeks but would it be as attractive once pandemic restrictions eased and people started going outside again? E-commerce sales rose 135% annually between October 18 and 25. But would as many people shop online once it is safe to go outside and mix again or would we all need a break from our devices?
Samad Samana, an analyst with Jefferies (JEF), joined the chorus of questions. Samana said: “The looming question for Shopify and really all e-commerce related businesses is can they sustain that momentum that we’ve seen in the early half of the year into the second half, especially as stimulus is tapered off here in the United States.”
TikTok partnershipAre you ready to dance? Shopify gets trendy by linking with social network TikTok so its stores can upload videos showcasing their products to sell to its 800m active users. Investors are down with the kids and excited at the prospect of a partnership, sending the stock up 4.2% to $1,082.89
TikTok lets users posts minute long videos where they dance, twerk, sing, make jokes and now Shopify’s stores will be able to advertise directly to them. It soared in popularity in 2019 and jumped from 269th to 4th in global app downloads rank. The app is used by celebrities such as former wrestler The Rock and US dancer and social media personality Charli D'Amelio, who boasts more than 100m followers.
The TikTok for Business Ads Manager was added to the range of Shopify apps in the US initially. It let Shopify stores create video ads through their own account where targeted viewers can click to make a purchase. That’s if they can stop lip-syncing for a minute.
Helping users get on TikTok provided a new global market beyond Facebook (FB), Instagram, and Twitter (TWTR). That was important as trends change and users shift platforms. Growth among young people aged 16-24 has slowed on Facebook and Twitter but is still rising on TikTok. After all, who wants to be on the same social media platform as their parents? Now Shopify users could reach potential customers on whichever social media platform they were on and whatever their age, meaning more opportunities for sales.
Data hackUsers are warned of a data breach that targets renowned Shopify celebrity user Kylie Jenner’s make-up company. The stock falls 2.4% by the next day’s close to $1,028.99.
Taking home a company pen or post-it notes from work might be ok, but everyone knows stealing data is a big no-no. That message didn’t get through to some Shopify staff though. A pair of rogue employees allegedly stole order records from Kylie Cosmetics and also thought to have targeted up to 200 other sellers on the platform in September.
The employees were reported to the FBI after taking names, addressees and order details. It’s unlikely that they were looking for pen friends. Shopify was less worried about financial data being stolen, as it said the information hacked only contained the last four digits of payment cards. Technically that shouldn't put card details at risk – unless someone is really good at guessing.
Cashing inShopify launches a new stock placing but at a discounted share price. Current investors react poorly to newcomers bundling in cheap, and the stock falls 23.2% from the start of the month to $870.76 on 17 September.
Shopify’s stock had already hit record highs of $1,134 and market sell-offs suggested that some investors might be cashing in on their profits. The September stock offering saw shares priced at $900 each on September 15 – a nice little gift to new investors, as the stock was actually trading at $929.39.
BigCommerce bounces onto the marketAn overweight analyst rating puts Shopify back on the bull run after investors wobble on rival BigCommerce’s IPO listing. Shopify ends the month back above $1,000, finishing at $1,066.42.
Shopify rival BigCommerce (BIGC) made its stock market debut on August 5 and it had a great opening day, rising 292% to $93.99 during trading. In contrast, Shopify’s stock rose by only 51% on its first day. BigCommerce’s impressive debut left Shopify investors green with envy and the stock fell from $1,094 on August 5 to $971.99 by August 11.
However, Shopify got a burst of optimism on August 26 when Atlantic Equities analyst Kunaal Malde initiated coverage of the stock with an overweight rating and a very generous $1,150 target price. Explaining his generosity, Malde said: "Shopify is significantly under-monetized, with product extensions, such as fulfillment, providing a significant upside opportunity. The stock’s valuation is the key hurdle, but the total addressable market is vast, there are increasing benefits to scale, and e-commerce acceleration has sustained as economies reopened.”
His prophecy was almost complete when the stock hit a record high for 2020 at $1,134 after Walmart (WMT) announced the go-live data for its new subscription service that linked with Shopify.
Shopify had already announced that it would partner with the retail giant on its Walmart+ service set-up to rival Amazon. It offered free delivery on its third-party marketplace on which some Shopify stores will be able to list.
A start date was set for September 15 nationwide and investors were excited at the prospect of Shopify stores having a new route to sales and the ability to take on Amazon (AMZN) while also boosting revenues for the company.
Bigger than eBayMore stock sells through the Shopify platform than on eBay (EBAY) for the first time as Shopify’s Q2 results show that it continues to benefit from the pandemic, even pulling in a small profit. The stock rose 6.9% on the previous close to $1,053.59.
eBay was the third-largest player in the US e-commerce market in 2019, behind Amazon and Walmart. But Shopify showed its strength. Its second quarter results showed sales through the platform rose 119% annually between April and June to $30.1 billion. This compared with $27.1 billion through eBay. An impressive achievement.
Total revenue for the second quarter almost doubled, up 97% annually to $714.3m as it benefitted from online sales and was boosted by new users trying their hand at entrepreneurship now that they were stuck at home or had lost their jobs.. The number of new stores created on the Shopify platform grew 71% annually as more shops looked to take advantage of spending habits shifting online.
The bulls are backBullish analysts come out of the woodwork as RBC Capital’s Mark Mahaney gives Shopify a price target of $1,000 per share, pushing the stock up 5.6% to $863.56 in a day.
Shopify was already riding high after announcing some of its stores would be featured on Walmart (WMT)’s new third-party online marketplace. That would give both a big chance to compete against the giant that is Amazon (AMZN).
Mahaney helped the stock make gains after it provided the company with an “outperform” rating and increased its one-year price target from $825 to $1,000 per share.
He noted how the pandemic had changed consumer buying patterns and moved transactions online, which benefits Shopify as more internet sales mean more fees from merchants, pushing up revenues and maybe even one day helping it make a profit.
Valuation questionsAnalysts question Shopify’s meteoric rise as it hits a new high of $825 on May 22. If you had purchased $1,000 worth of Shopify stock at its IPO in 2015, you would now be sitting on around $45,764.
You can’t sniff at a 4,752% return. But analysts were starting to get fidgety and questioned the valuation, leading to a 6.7% drop by May 26 to $767.89.
Craig Kirsner, president of Stuart Estate Planning Wealth Advisors, said: "I 100% believe that companies like Shopify and Zoom are overpriced. They are based on the needs of the world right now and that need will go down once we are past coronavirus."
“I do believe these companies will be more important going forward. However, they are probably overvalued currently, as most bubble-type investments are."
No-one likes the word bubble being associated with their stock. Wedbush Securities analyst Ygal Arounian was more optimistic. He said: “We are not going back to the pre-Covid normal. You are already seeing significant changes in the retail landscape. You are seeing bankruptcies for major retailers' department stores. It's a positive for e-commerce and Shopify. It's going to be a new normal and it's going to include a lot more online and omnichannel commerce.”
Largest stock in CanadaO Canada, our home and native land. Or so the national anthem goes. Shopify probably feels pretty patriotic round about now, as it briefly becomes the largest stock in Canada.
It comes as its Q1 results are full of plenty of positivity despite the pandemic, sending its stock up 7% on the previous day’s close to $733.53.
From Celine Dion to Justin Bieber, Shopify joined an illustrious list of successful Canadian exports. It overtook the Royal Bank of Canada (RY)’s market capitalization for a day after reaching a valuation of $85.1bn.
Shopify’s first quarter update showed the benefits of providing an online e-commerce service during a pandemic. The number of new stores was up 62% between March 13 and April 24 as transactions shifted online. It also reported more new merchants signed on to Shopify’s fulfilment network in the first quarter of 2020 compared to any previous quarter since its launch in June 2019.
Black Friday every day!It turns out a global pandemic is actually pretty good for a company that supports online sales and deliveries. Who would have guessed it? A shift to online sales helps Shopify, and Chief Technology Officer Jean-Michel Lemieux gloats that every day is now Black Friday.
The market overlooks abandoned financial guidance to climb 63.7% since the start of the month, reaching $629.90 by April 20.
Shopify issued a Covid-19 update in early April where, unsurprisingly and in line with many other firms, it said it was suspending its full year financial expectations.
This didn’t dent investor confidence though, and the update also outlined how the firm was helping users to leverage and benefit from the shift to online services. It launched free trials to attract new users, and unveiled tools to help find government funding.
Shopify supported curbside and in-store pickups so people could still shop while social distancing. The company showed its social conscience by terminating thousands of users it said were charging unfair prices or making false claims about Covid-19-related items such as face masks or hand sanitizers. That was an important move, as some retailers faced criticism for hiking prices during the pandemic.
Could Shopify benefit from the pandemic?Coronavirus infections are out of control and much of the world’s population is on lockdown. Most businesses close their doors – no-one can go to shops anymore because there is a virus waiting outside for them. It’s hard to run a physical shop without customers. But could this actually be good for Shopify?
Online sales in the US went up 25% between March and April, including a 100% increase for online groceries and 62% for buy online pick up instore, so there was a big opportunity. It was also a chance for Shopify to earn extra fees from its payment services and fulfilment center as more people turned to contactless payments and deliveries.
Investors saw the upside and the possibility of Shopify becoming a positive pandemic stock, sending it up 14.5% to $430 on March 24 at the same time that the US government and others proposed stimulus measures such as loans and tax cuts to support and save their economies.
Covid cancels conferenceThe pandemic starts to hit the Western world, raising fears of a global economic downturn. Shopify’s developer conference becomes an early casualty. The markets seem to like its cautious approach as the stock rises 5.7% during trading to $463.30.
Shopify’s annual Unite conference brought together its developers and users and made its founders rockstars as they outlined new developments each year. Toronto was set to be the venue for the 2020 event. But as cases started to rise in Canada, the Ottawa-based company said it was best to cancel its conference to protect everyone’s health.
The company’s stock later fell along with most markets in the first couple of weeks of March , dropping 17.5% in a day to a four-month low of $322.29 by March 16.
Financial results and FacebookShopify beats analyst expectations with its Q4 and full year results for 2019, sending the stock up 8% on the previous close to $531.25. It even hit $593 during peak trading.
No-one likes being underestimated and Shopify proved the doubters wrong when its fourth quarter revenue was up 47% annually to $505.2m. This was above analysts' average forecasts for revenue of $482m and the markets were also impressed to see the rate of growth increased from 45% in the previous quarter. It still posted an operating loss for the fourth quarter of -$30.1m.
Total revenue for the full year 2019 was $1.57bn, which beat even Shopify’s own forecasts, but that profit remained elusive, with another reported operating loss for 2019 of -$141.1m.
Later in the month, on February 21, Shopify went all crypto and joined the Libra Association. Facebook (FB) was working on its own digital currency unconnected to the banking system – didn’t want to let Bitcoin (BTC) have all the fun. Libra would help those without easy access to a bank account or stable financial systems make digital payments, designed to move between wallets with low or even no fees. That would ultimately save money for Shopify and its users, so it was worth one of those big weird blue Facebook thumbs up.
Shopify launches starter loansShopify steps up its support for businesses with the launch of starter loans to help entrepreneurs get their ideas off the ground. The stock climbs 1.8% to $448.5 but finishes the month on a high.
Starting a business can be pricey. You need to pay to register your company, get a website, buy stock. Unfortunately, money doesn’t grow on trees, but Shopify wanted to help firms get started. It launched loans of $200 through Shopify Capital to give new businesses a cash boost. Every little helps.
Bruce Murray, CEO of the Murray Wealth Group, also paid what seemed to be a compliment to the stock. He told Bloomberg: “Shopify is one of the most expensive stocks on the face of the earth but it’s one of the fastest-growing stocks on the face of the earth and that’s what you get.
“We bought Shopify around $170 and we sold half of our position in the $400 range to take our money out. I believe Shopify’s outlook for the business is great and that probably will transfer into the stock over the next few years.”
The stock finished the month at $465.66. That’s a massive 1,713% higher than its IPO day closing price of $25.68.
Working 9-5, what a way to make a livingShopify founder and CEO Tobias Lutke delivers an upbeat message to followers over the festive period, telling them to not work so hard.
He revealed in a Twitter thread that he needs at least eight hours of sleep at night and is always home by 5.30pm. He’s managed to build a $48bn business being this laid back, so he probably knows what he is talking about.
Lutke said: "I'm home at 5:30pm every evening. I don't travel on the weekend. I play video games alone, with my friends, and increasingly with my kids. My job is incredible, but it's also just a job. Family and personal health rank higher in my priority list.”
The stock just misses ending the year above $400 but still finished up 188% annually to $397.58. Its price was helped by analysts and fund managers who continued to love the stock. James Telfser of Aventine Asset Management noted that Shopify was behind almost every brand you see. He meant that in a good way, we think, rather than like a creepy illuminati conspiracy.
“It’s a fantastic business when we talk about retail and what’s hurting retail,” he said. “Shopify is behind every brand that you see and you want to buy that doesn’t have bricks-and-mortar. They’re doing great things and they’re really expanding into being the full-service solution on the shipping side and everything. You’re never going to get this stock at a cheap valuation because their revenue growth has been at nosebleed levels, but they continue to do that year over year.”
Black Friday sales boom againBlack Friday sales through Shopify stores reach almost $3bn, peaking at $1.5m per minute during the post-Thanksgiving shopping bonanza. Shopify shareholders seem more interested in selling stock though, as the share price falls 1.7% by the following Monday to $330.84.
Shopify had just hit one million stores so technically if each one sold $1,000 of stock over the Black Friday and Cyber Monday shopping events they should easily hit $1bn sales as in recent years. That’s just basic math. The company’s merchants did even better than that though and broke the previous year’s records with $2.9 billion of sales, up from $1.8bn in 2018.
Consumers spent an average of $83.05 per order, with Canadian consumers spending the most at $96.30. That's a home-field advantage, right there.
1m markShopify hits new heights, passing one million users as it reveals its Q3 results. The stock hit $319.85 during trading but closed at $313.57.
The company has not only created millionaires and passed its millionth user, but it’s helped to support more than 1.4 million jobs around the world. The online sales growth of all its stores was 59% in 2018, more than double the growth of the global e-commerce market. The numbers do the talking.
Its user milestone came as the company revealed total revenue for the third quarter was $390.6m, up 45% annually and beating analyst estimates of $384.5m.
September slumpShopify goes all robocop with its latest acquisition of 6 Rivers, but a stock placing fails to impress the markets and the price declines 23% across the month to $311.66.
There were plenty of announcements that should have been good for Shopify in September. It announced the acquisition of software and robotics firm 6 Rivers for $450mn, to integrate AI into its new fulfilment centres so it could keep track of stock and get robots to help with the picking and the packing. Who needs humans anymore.
Robots failed to impress investors though, as the markets reacted badly to another stock placing. Shopify on September 19 closed on the sale of 2.1m shares priced at $317.50 each to raise $694m. The money would be used to boost its balance sheet and fund its growth but it meant investors again faced their shareholding being diluted.
Second quarter strengthShopify is hitting the stratosphere - its market cap has overtaken eBay. The soaring share price gets another boost from its Q2 results and climbs 7.7% to $341.39 when they are released on August 1.
Shopify’s market capitalization hit $40bn during 2019 and thundered up to $130bn in the first half of 2020 as its shares shot up. In comparison, eBay’s valuation was $28.7bn in 2019, despite listing all the way back in 1998. Shopify also saw Gross Merchandise Sales (GMV) overtake eBay in Q2, rising 119% to $30.1bn compared to $27.1bn for eBay's second quarter GMV.
The prospect of new features, including its much-praised Amazon-style fulfilment centres, gave the company enough confidence to increase its full year revenue forecasts to the range of $1.51bn and $1.53bn. This was up from a range of $1.48bn to $1.5bn predicted in the previous quarter.Investor confidence helps the stock hit $406 by the end of the month.
If you had purchased £10,000 of the stock at its IPO for $17 you would have a tidy return of 2,288% or almost $230,000. That could get you a 2019 Ferrari Portofino with some change to spare. Broom broom.
Competing with AmazonIs Shopify becoming the new Amazon (AMZN)? It unveils plans to launch a new Amazon-sounding fulfilment network and the stock hits a new high for 2019 as it climbs to $328.01, up 138% from the start of the year. If it looks like a duck, and quacks like a duck…?
Amazon delivers 2.5bn packages a year and is becoming a serious competitor to incumbents like FedEx (FDX) (3bn) and UPS (UPS) (4.7bn), so why not follow its own example? Shopify launched its own warehouses where users could store stock and arrange for it to be delivered. Shopify showed it had a smaller ego than Amazon though, by letting sellers put their own branding on the packaging. Centers were set up with third parties in California, Georgia, New Jersey, Nevada, Ohio, Pennsylvania and Texas.
The company also introduced 11 new language capabilities so shops could sell internationally in the local dialect and take different currencies. C’est magnifique!
Getting SaasyShopify suffers an identity crisis as Morgan Stanley (MS) raises questions over its valuation and the type of company it should be seen as.
Is it a bird, is it a plane, or is Shopify SaaS company? It was none of these according to Morgan’s Stanley’s Brian Essex. He downgraded the stock from equal weight to underweight, giving it a price target of $173, from $209 previously. He suggested Shopify’s stock growth was “unwarranted” as its income was more transaction-based than a typical SaaS company, which mostly has recurring sales.
Revised forecastsShopify grows its real-life presence with the launch of a new branded hardware to help users take payments and manage stock in stores. Its share price climbs 18% over the month, boosted by the impressive first quarter results.
Selling online is all well and good, but shoppers tend to actually spend more in a physical store. Research by consumer group First Insight found 71% of shoppers spend $50 or more when shopping in-store. This compared with only 54% of respondents spending more than $50 when shopping online. Shopify said many of its members start online with the aim of eventually growing into physical retail or even just operating a pop-up. The company didn’t want to miss out on the trend so it launched a new branded chip reader and a digital portable till where users could manage orders and control stock that would be linked to their Shopify account. Shopify had become a real live boy, as Pinocchio would say.
Shopify also upped its revenue expectations for 2019 to a range of $1.48bn to $1.5bn when it released its Q1 results on April 30. That was above the range of $1.01bn to $1.02bn previously predicted. This was enough to impress investors despite revenue only rising 50% annually to $320.5m in the first quarter, along with an even bigger operating loss, hitting -$35.8m compared with a loss of -$20.3m a year before.
Crossing $1bn markShopify makes history, finally crossing $1bn in revenue. The markets show their appreciation for its annual update, pushing the stock up from $175.55 on results day on February 12 to grow 7.7% to $189.15 by the end of the month.
The firm reported impressive revenues of $1.07bn for 2018, up 59% annually. Lutke said: “We made history in 2018: no other software-as-service company (Saas) company has crossed the $1bn revenue mark at a faster growth rate than Shopify has.”
Eat that, Citron Research!
Happy New YearLights, camera, action! The opening of a new production studio and a high-profile appointment help the stock climb 22% during January.
Shopify adds a new string to its bow with Shopify Studios, launched to develop entrepreneur-focused docu-series and feature-length documentaries. Who doesn’t love films about small businesses? Time to crack open the popcorn.
Shopify also appointed Colleen Johnston to its board of directors. She was a former chief financial officer (CFO) of Toronto-Dominion Bank and had previously been named CFO of the year by Financial Executives International Canada, PwC and Robert Half International. Johnston was also named among the 25 most powerful women in banking by American Banker three years in a row from 2009 to 2011. So not a bad name to have on the teamsheet.
Black Friday boostShopify sellers have a busy Black Friday and Cyber Monday sales period, with $1.5bn of sales between November 24 and November 26. The stock also has a good day when the stats are released on November 28, rising 3.8% on the previous close to $149.90.
Everyone is used to images of crowds filling supermarkets to get the so-called Black Friday bargains. Internet traffic was just as busy, but microchips are more polite. Shopify stores registered 10,978 orders per minute at its peak during the shopping days. There were more than $37 million sales per hour through the platform and 18.5% of all orders were shipped internationally. Packages travelled more than 30 billion miles in total - ten times the distance between the Earth and Pluto.
Getting physicalShopify gets physical (no, not in that way: get your mind out of the gutter). The e-commerce platform opens its first-ever real-life store in Los Angeles, providing in-person help and support to merchants and aspiring entrepreneurs.
Businesses could get advice on using the platform and also connect with other members of the entrepreneurial community. The stock rose 5% by the following day’s close to $135.20.
Analyst boostWedbush analyst Ygal Arounian started coverage of Shopify by giving it an outperform rating, pushing the stock up almost 6% in a day.
Arounian predicted Shopify had plenty more space to grow beyond 600,000 users and set a price target of $177. The stock rose from $153.63 on 17 September to increase by 5.6% to $162.28 the following day.
Shopify reaches a billion ordersThe trumpets sound and confetti is released as the billionth order is processed through Shopify. However, second quarter results are also released and fail to rouse investors. Its stock fell 6.7% to $138.21 when its company filings were announced on July 31.
Scientist Clifford Stoll famously said in 1995 that the internet was just a fad and there was little use being online. He even wrote a book about it, called Silicon Snake Oil, in case you’re short on some bedtime reading. But tell that to Shopify firms, who had managed to process a billion orders through the online superhighway.
Shopify’s reported revenues were up 62% annually to $245m during the quarter but the company was still left with an operating loss of -$30.8m or 12.6% of revenue. This was a higher percentage than a year before when its operating loss was 10.5% of revenue. The stock was also pushed downwards as revenue growth remained slower than previous quarters.
Going mobileForget sitting at a computer for work, the world is getting increasingly mobile so Shopify launches an app to let users control their business via their fingertips. The stock rises 3.3% to $137.9.
Let’s face it, we spend a lot of time on our mobiles these days. A new app for the company’s shops called Shopify Ping let users respond to messages from Facebook, emails or other online chat services in one place. You could be lying in bed, sitting on a train or in the bath – now there was no excuse not to respond to customers.
Shopify rival Magento gets acquiredShopify nemesis Magneto is snapped up by Adobe systems and the market likes the deal, bumping the share price up 16% through May to $148.09 as interest grows in the potential of cloud commerce now that the big boys are getting involved.
Computer software company Adobe Systems took over e-commerce platform Magento for $1.68 billion. The deal gave Adobe Systems ammunition against its rival cloud software provider Salesforce as it could now enter the world of e-commerce. It’s not just about PDF documents anymore.
Magento launched in 2008 and had previously been acquired by eBay in 2011. It later went private again in 2015 but had long battled Shopify for market share. Both offered vital e-commerce essentials such as website templates, sales and marketing tools and apps for a company to jazz up their online presence. Shopify was seen as more user-friendly and simple to use but Magento was good for those with more technical expertise as its platforms gave users more freedom to customize their online stores and build their own apps. Magento powered 315,000 websites by 2018 compared with 600,000 that used Shopify.
Another quarter, another lossThe markets look to be getting a bit tired of persistent losses, as the stock drops off the back of Shopify’s first quarter results in 2018.
Revenues rose again in the first quarter, up 68% annually, but it was still left with an operating loss of -$20.3m as it spent much of the three months building new features such as integrating Google Pay onto its platform. The company’s ‘Shopping on Instagram’ feature was also expanded during the quarter beyond the US to the UK, Australia, Canada, Germany, France, Italy, Spain, and Brazil.
The results still beat analyst expectations but the revenue growth was slower, below the 75% reported in the same quarter last year, which worried investors. The stock fell by 4.4% in a day to $127.68 on May 1 and fell further to $124.81 by May 2. Investors quickly regained their confidence though, and the stock bounced back to $135.17 by May 3.
Google it!Shopify becomes the first commerce platform to offer Google Pay to its merchants, sending the stock up 5.1% by the close of the next day to $153.11.
Shoppers could already complete a purchase using Apple Pay but what about all those smug Android users who haven’t bitten into the iPhone craze? Google Pay had 39 million active users by 2018 and now Shopify sellers could make it easier for them to pay for items on an Android device. Take that Apple.
The stock was also boosted on March 20 by a new “shopping on Instagram” feature allowing businesses to tag products in posts. That meant a business could post an image of their product such as a handbag or earrings and have it potentially viewed and clicked on to purchase by Instagram’s 500 million daily active users. The tool was used by brands such as Gymshark, a cool fitness apparel company.
Some anti-social network news soon followed as Facebook faced investigation from the US Federal Trade Commission over claims that it gave Cambridge Analytica, the political consulting company that worked on Donald Trump's presidential campaign, unauthorised access to the data of 50 million users.
What does this have to do with Shopify though? The problem is that short seller Citron Research dragged the company into the story, claiming that its own stores could be hit if the social network restricts how data is shared.
Citron claimed that Shopify stores were reliant on Facebook ads, and if they couldn’t promote to as many people as before, where would all those sales come from? Citron Research’s Andrew Left warned: “Rocked to the core of its business model, Facebook has no choice but to take away Shopify’s punch bowl. As the scope of Facebook’s severe privacy problem gets exposed, Facebook has no choice but to drastically revamp how it sells data — data about you and your personal behaviors.”
Citron said Shopify’s stock should be closer to $100.
Shopify denied its users success was tied to Facebook ads. But the damage was done and the Citron Research analysis pushed the stock down 6% to $128.82 by the close of the next day on March 27.
High praiseAn endorsement from Apple CEO Tim Cook sends the stock up from $124.9 on January 25 to rise 3.3% to $129.07 by the end of the next day.
Praise doesn’t come much higher than the boss of Apple. Cook visited the Shopify offices for a demo of a new augmented reality function that the companies were developing together to allow customers to see how a product would look in their home through their iPhone. Cook described himself as a big fan of Shopify.
He said: “I love the fact that their focus is on democratising technology for entrepreneurs that are largely artisans and bringing their products to market so that these merchants can focus on what they are great at."
The markets ate it up and the stock went beyond $130 during trading.
Back in blackA busy Black Friday helps push the stock up after the weekend. Shopify reports more than $1bn of sales through its platform on the consumer day of madness.
More than $1m in sales went through the platform per minute at the peak. This gave the stock a bounce once the market reopened on Monday, rising 1.8% by the close of trading to $113.36 off Friday’s close.
Failing to impressShopify creates new jobs and reports strong third quarter results but investors are still smarting from the Citron Research warning and stock drops 9% from the previous day’s close to $99.49.
Total revenue in the third quarter was $171.5m, a 72% annual increase. Operating loss for the third quarter of 2017 was $12.7m, or 7.4% of revenue but this was still better than the year before when losses made up 9.5% of revenue. Shopify also announced during October that it planned to triple its Waterloo-based workforce, but this couldn’t prevent the stock dropping.
Get rich quick?Analysts at short seller Citron Research make a dent in the Shopify stock after describing it as a “get quick rich scheme” based on its ambitious claims to make its users millionaires. This kicks off a slump, with the stock priced at $119 at the close of trading on October 2 and hitting $92.57 by October 10, down 22%.
There are plenty of stories and videos dotted around the internet that show entrepreneurs who claim to have become millionaires through Shopify. The best known is Kylie Jenner, the youngest of the notorious Kardashian sisters (the one who isn’t married to Kanye West.) She may have started off with an advantage but the kid done good – she’s built a billion dollar cosmetics brand using Shopify tools to manage her online sales and presence. Now there’s something to aspire to.
Others have made millions from dropshipping, where their sole business is taking orders for a popular product they find and passing them on to a third party supplier who sends it to the customer. Then in the middle there are some heartwarming homespun success stories. For example, Ben Francis founded UK fitness wear company Gymshark in his bedroom aged 19 and built the store using Shopify to handle his website and order processing. It went on to become a billion dollar company after US private equity firm General Atlantic took a 21% stake in the business in August 2020.
But is still a whole lot of scepticism out there about how easy it is to make a million. Andrew Left of Citron Research didn’t hold back when he warned that although Shopify was “the best e-commerce software” out there, it nevertheless misrepresented the earnings that merchants could make. He claimed most of those promoting the millions that could be made were in fact paid by Shopify. Something the brand vehemently denied.
Left even urged the Federal Trade Commission to examine Shopify's claims about the money that users can make. Bet that took him off the company’s Christmas card list.
Building better competitionA new mentoring competition setup by Shopify helps businesses generate more than half a billion dollars of orders. That’s enough to reach beyond the Earth’s stratosphere in single dollar bills. Its support for entrepreneurs sends the stock up 6.5% to from $110.67 on September 5 to $117.90 a week later on September 12.
Shopify launched its first ‘Build a Bigger Business’ competition in March. It gave entrants five months of training and mentoring support for those wanting to grow from $1m to $50m businesses.
It attracted applicants from 70 different countries, spread over 750 cities and generated more than 8 million orders. The average growth for the businesses participating in the competition was 14% during the competition period. Not bad for five months of work.
The winners got a fun day out to ring the opening bell at the New York Stock Exchange, received strategic and creative planning/support from brand-building agency Sid Lee and an exotic sounding trip to Namale Resort & Spa in Fiji for five further days of mentorship. And probably some sunbathing.
Half a million usersInvestors eagerly await Shopify’s second quarter results as its userbase powered past the half a million mark, sending the stock up 12.6% to $104.08 by the end of trading on the day of the announcement.
Shopify was by this point powering 500,000 businesses in 175 countries. That included the online presence and stores of major brands such as Tesla as well as one-man bands operating from their bedrooms. Since 2012, the number of merchants on the Shopify platform had grown annually at an average rate of 74%. That’s pretty big.
The announcement was accompanied by the latest results, which showed revenue in the second quarter up 75% to $151.7m. Its operating losses continued, hitting $15.9m, but that still beat analyst expectations. So all in all, things were looking up.
eBay integrationSellers will soon be able to list and sell their products on eBay directly from their Shopify account.
Auction site eBay isn’t just where old clothes are sold anymore, in fact 79% of items sold on the site are new. Its 169m active users provide a pretty large potential customer base where billions of dollars-worth of transactions take place each year. Integrating with eBay meant Shopify users could upload and update listings and respond to messages through the e-commerce platform and get them automatically updated on the auction site. That’s a lot of potential buy-it-now clicks. The stock barely moves though.
400,000 users and 30,000 BeliebersShopify hits a record number of users and celebrates its Canadian heritage by highlighting key celebrity Canadian customers... such as one Justin Bieber. The firm also unveils its first quarter results for 2017. The stock remains flat though at around $90.
Tobi Lutke, CEO of Shopify said: “Our merchants include everyone from Justin Bieber and the Canadian Football League (CFL), to a craftsman who moved to Lunenburg, Nova Scotia for a slower pace of life and now creates and sells beautiful woodcraft goods.” Love it.
Canada also turned 150 the same month. The birthday was a big deal for Shopify, which was born in the country and which has plenty of native celebrity users. The milestone coincided with Shopify’s first quarter results, which showed the number of stores had passed the 400,000 mark: 30,000 of which were Canadian.
Doing it old school, the chip and swipe wayShopify expands its offering with a new card reader that impresses investors and helps the stock rise 4.8% to $76.06.
Why restrict your sales to online? There are still old fashioned customers who actually go into shops, or so we hear. So Shopify launched a free Chip and Swipe card reader for in-person selling. With Europay, MasterCard and Visa support, the new Chip and Swipe reader let any Shopify merchant in the United States take payments offline.
Investors also got excited amid rumors that eBay might make a bid for the company.
Coachella effectFestival-friendly Shopify stores get ready for one of the world’s largest musical festivals.
The Coachella Festival, held over the first two weekends of April, attracts 250,000 people to watch live music, take selfies and generally kick back and go nuts. Brands love it for its eyecatching images, iconic fashion status and media buzz, and Shopify is no slouch when it comes to leveraging the appeal.
“If your retail brand targets millennials and Generation Z, knowing how to attract festival-goers can be music to your ears,” urged the brand in its blog. “Learn the trends for this year’s festival season and brush up on some key marketing tactics to know how to reach this key demographic, courtesy of a handful of Shopify merchants who sell festival-friendly merchandise.”
Full year resultsShopify reports a record fourth quarter for new users, taking the total beyond 375,000, helping the stock rise 8.1% to $60.61.
A lot of this was driven by booming Black Friday/Cyber Monday sales. The company said the level of activity on its platform reached a peak of almost 3 million requests per minute. That’s a lot of sales to process, and Shopify reported revenue for the fourth quarter of 2016 up 86% to $130.4m.
Getting connectedShopify confirms a long-awaited partnership with Amazon (AMZN), sending its stock up 8.1% to $47.68.
Amazon is still the place to be for online stores wanting to reach a mass audience. If you want to sell your product, you can’t get much better than the world’s largest retailer as a distribution line.
Amazon users spend on average $600 through the site and it gets almost 200m visitors a month. That’s more than the entire population of Russia and a LOT of potential rubles. So it was good news for Shopify users when the company said they could connect their account to their Amazon store and manage sales and inventory all in place. That meant no more clicking through different websites to keep track of sales.
Keeping up with KylieKardashian sister-turned-entrepreneur Kylie Jenner launches her own pop-up store with Shopify for the first time to sell her makeup range, and builds a fancy website through the platform. The share price barely moves, but it makes a massive media splash and brand recognition goes through the roof.
Kylie Cosmetics was already an established Shopify brand. The celebrity’s makeup range was so popular that Shopify had to write its own software so it could manage a virtual queue in order to stop her website from crashing. Her new collections historically sold out in minutes, often because people would design sneaky bots to purchase the makeup in bulk and then sell elsewhere.
So Shopify came up with an old-fashioned solution. It helped Kylie build an actual real life popup store in Westfield Topanga, launched on December 9, where people could see, touch and buy her products. They were then sold on her Shopify-powered website a day later on December 10. Kylie even turned up for selfies.
The whole concept turned out to be such a barnstorming success that Shopify recreated the experience during New York Fashion Week, shutting down a whole Manhattan street two months later.
Black Friday boomTalk about a hot minute. The Shopify platform processes more than half a billion of transactions in just 60 seconds during Black Friday and Cyber Monday sales.
The increased sales fail to push through to the stock price though and it falls 2.31% between Black Friday on November 25 and Cyber Monday on November 28.
Everyone loves a bargain though, and the post-Thanksgiving Black Friday sale has gone global, stretching across the UK, Europe and of course the US. At its peak, more than $555,716 of transactions occurred in a single minute during the festivities through Shopify, the company said. That’s a lot of new coffee machines.
Third quarter boostShopify squares up to the big boys, flexing its muscles by saying it would “rather buy Google than be bought” as it releases strong third quarter results to push the stock up 6.8% in a day to $43.57.
Shopify was already rumored to be on Google’s shopping list and analysts and journalists were curious about the prospect. But Russ Jones was having none of this during an interview when Shopify’s third quarter results were released. The Shopify CFO said: “We would never talk about these things publicly. Our path is really to become a very important, independent public company. We see that there’s lots of room to grow and that’s the path we’re on. I mean, if you ask Tobi (Shopify CEO Tobias Lutke) at some time, he might even like to buy Google.”
Its third quarter results showed revenues grew 89% annually to $99.6m and it reached more than 325,000 users. Operating losses for the third quarter of 2016 were -$9.5m, or 10% of revenue, versus $4.3m or 8% of revenue a year before. The results also showed Shopify’s stores were reaping the fruits of its Apple Pay integration, with users reporting that double the number of mobile customers were completing purchases on items they put in their checkout using the payment method.
Acquisition trailShopify dips into its war chest to make its first acquisition as a public company. Way to flash the cash. The stock remains flat on the day of the announcement but climbs a week later on October 10 by 3% to $44.30.
The company went shopping in Canada and purchased Boltmade, a 21-person product-focused digital consulting and design company based in Waterloo, Ontario. The acquisition gave Shopify access to more expertise so they could help users customise their stores and attract more sales. Both already had plenty of experience working together as Boltmade had designed software for Shopify.
FundraisingShopify returns to the markets for more money for the first time since its IPO, raising $286m by selling 8.6m shares. The prospect of more money to expand its ever-popular offering helps to push the stock back past the $40 mark.
It had already grown to more than 300,000 users including Tesla Motors (TSLA), Budweiser (BUD) and the LA Lakers, who used the platform for their technology and online stores, but Shopify wanted a bigger war chest to offer even more features.
It sold 6.1m of new shares and 2.5m from existing shareholders in a placing backed by Morgan Stanley (MS), Credit Suisse (CS) and RBC Capital Markets (RY).
The stock rose $42.47 on August 22 when the total fundraise was revealed, a 25% increase on the start of the month.
Strong salesA high-profile celebrity user and a new sales milestone please the markets, sending the stock up 9.7% to $36.79.
Shopify’s celebrity following increased after it was revealed on July 22 that singer Adele had joined Shopify to sell her latest album online. She even got a personal welcome on Twitter from chief platform officer Harley Finkelstein.
The brand’s fourth quarter results, released on August 4, showed how Shopify was benefiting from more users signing up, including Adele, plus more payment options. More than $1bn was purchased through its platform on a quarterly basis for the first time. Revenues grew 93% to $86.6m. Things were looking up on the profit front as well, as operating losses also reduced on a quarterly basis to -$8.7m. Could it soon be rolling in the deep (profit)?
Shopify adds Apple PayApple Pay is added as the latest payment option for Shopify users, giving the stock a 3.7% boost by the close of the next day’s trading to $29.05.
Who actually pays with cash anymore? Apple Pay was helping speed up the shift to a cashless society, allowing iPhone users to register their debit or credit card on their device and pay by tapping or scanning with their phone. A fifth of iPhone6 users in the US reported using ApplePay at least once and it was gaining a million new users each week. Shopify allowed its stores to take a bite out of this trend and added ApplePay to its service, making it easier for shoppers to complete transactions.
Shopify’s own data showed that while 60% of checkouts on its stores were on mobile, only 40% completed. Adding ApplePay would hopefully make it easier to get sales completed.
The stock had already been boosted earlier in the month with the launch of a Shopify Plus partner program, which connected stores with high profile design agencies and app developers to get expert advice and help with their websites and marketing. Partners could develop their own apps and website designs that are then sol through Shopify’s platform.
Big fans included design agencies such as Eastside Co, which includes singer Lady Gaga on its list of clients, having helped her reach the edge of glory by creating a Shopify store so she could sell her merchandise online. Reality TV star Kylie Jenner also used apps and tools on offer through Shopify Plus to sell make-up online through her self-named brand Kylie Cosmetics.
Mobile sales overtake desktopShopify reveals its platform now takes more mobile than desktop orders as it publishes its first quarter results for 2016. This technological shift doesn’t prevent the price from falling though.
Shopify’s first quarter results, released on May 4, showed revenues kept rising and were up 95% annually to $72.7m, but it can’t shake off those operating losses. Gross profit grew 82% to $39.3m but it was left with an operating loss of -$9.7m.
There was an interesting snippet in the results for computer geeks and sales departments though. Orders on mobiles overtook those on desktop for the first time ever in the first quarter of 2016, with a share of 62%.
The markets weren’t feeling the love though, and the stock fell over several days, declining to a two-month low by May 16 to $26.10. That’s a big drop whether you are looking at it from a phone or desktop. The previous low was $25.80 on March 15, 2016.
Rise of the chatbotsShopify becomes the first e-commerce platform to partner with a chatbot, giving it a 12% boost across the month to end April at $31.85.
Who says customer service is dead? Shopping online may mean fewer chances to flirt with cashiers but Shopify users were given the chance to let their customers deal with a robot instead. The company announced it would integrate with Facebook Messenger to let users provide live customer support, automatically send order confirmations, shipping updates and push notifications. At least the chatbot doesn’t need a lunch break.
Shopify also moved beyond offering web tools to providing cold hard cash as well. It launched Shopify Capital so firms in America could access loans to buy equipment and inventory, launch new products, hire more employees and add new channels and products. It would get paid back by taking a proportion of your sales each month. The aim was to make it easier to access cash within a few clicks rather than lengthy bank applications.
Stock soarsShopify reveals just how much money is passing through its cloud during the company’s first Partner and Developer Conference – helping the stock end March up 24.3% at $28.21.
CEO Tobi Lütke looked rockstar all the way in a cool flat cap as he revealed to a San Francisco audience at the company’s Unite conference that businesses had passed more than $10 billion of transactions through the Shopify platform.
The stock also got a boost from a positive analyst rating and acquisitions rumors. Analysts at Pacific Crest gave Shopify a boost when they upgraded it to an “overweight”, with Brendan Barnicle praising its low customer acquisition costs and giving a price target of $45.
There was also juicy gossip that Google was on the acquisition trail for cloud computing and workplace application companies to support its own e-commerce products. Shopify was rumored to be at the top of its shopping list.
Users double but losses deepenRevenues keep rising but so do the losses. Shopify unveils its fourth quarter results for 2015, and it’s a double-edged sword. The number of users doubled since the previous quarter but operating profits are still nowhere in sight.
Total revenue for the fourth quarter of 2015 increased 99% annually to $70.2m but running a rapidly expanding e-commerce plan is expensive and operating losses increased to -$6.5m from -$4.5m a year before. Key activities for the quarter included the development of new software to let users create a buy button for any website they control, and the launch of a chip reader for businesses to use in their own shops.
The good news was that its customer base continued to grow, hitting 243,000 users and $7.7bn in transactions. Total revenue for the full year was also up 95% to $205.2m. On the other hand, it still reported an operating loss of -$17.8m, only a slight improvement from a loss of -$21.6m in 2014. The stock rose 9.1% to $22.37on results day compared with the previous close but then dropped 7.9% during trading the following day to $20.59. You just can’t please everyone.
New COO, but what about the CEO?Shopify appoints its first chief operating officer, with the promotion of chief platform officer Harley Finkelstein. What does this mean for founder and chief executive Tobi Lutke though?
Markets seldom look too fondly on the prospect of a respected senior exec stepping back, and the stock dropped by the close of the next day by 13% to $20.64.
A reshuffle always sets tongues wagging and it wasn’t any different for Finklestein. He was a familiar face and regularly spoke on behalf of the Shopify brand, and people don’t like change. Lutke said the appointment would give him more time to focus on product, technology and people systems, while Finklestein would lead interactions and communications with the 200,000 merchants using Shopify.
A millionaire makerShopify makes the bold claim that 2,700 people become millionaires each day, but even this temptation doesn’t move the stock.
Everyone likes the thought of building the next Tesla or Virgin and becoming a millionaire or billionaire in the process. It takes hard work and unique ideas but a Facebook ad from Shopify suggested that its platform was doing exactly that. The ad suggested that 2,700 people were becoming millionaires each day, and that Shopify could help you get there. It then linked to a webpage describing itself as the online store for “someday millionaires.”
It didn’t actually provide any examples of real Shopify millionaires, though, which might have helped. It just told people to sign up for a free trial. Don’t give up your day job, maybe.
Sell-off fearsThe markets react poorly to Shopify’s third quarter results released on November 5. Losses continue and restrictions end on pre-IPO investors selling their stock, prompting concerns that early buyers might start selling.
The stock had been dropping over the past couple of months anyway, and hit a low of $26.39 on November 17: worryingly near the closing price of the first day of trading post-IPO.
In fact, Q3 results for 2015 still showed impressive revenue growth of $52.8m, up 93% as more businesses signed up, taking users past 200,000. But turns out designing buy buttons for Twitter and integrating with Facebook isn’t cheap, and Shopify ended the quarter with losses of -$4.3m, from -$4.1m a year before. It had also spent time and money introducing Shopify Shipping during the quarter, which let US-based customers print and buy USPS shipping labels for up to 60% off retail rates. But hey, you got to spend money to make money, right?
The stock was also under pressure because investors who had backed the stock before its public listing were allowed to sell shares again from November 17 after restrictions, known as the lock-up period, ended.
Amazon integrationShopify rides to the rescue of small businesses abandoned after the closure of Amazon’s e-commerce product suite, sending its stock up by more than a fifth on the previous day’s close to $35.55.
Amazon had offered small - and medium-sized enterprises e-commerce tools since 2010 but announced in 2015 that it was closing its Webstore business. No reason was given but users were given a year to transfer their website and any other details they had stored with it.
This created a lot of hassle for businesses, who needed to get a whole new website, and new sales and marketing tools sorted, to make sure customers could still shop with them online. It was announced on September 17 that these stores could now be migrated to Shopify and could still ship products stored by Amazon. Customers could also still use their Amazon accounts to buy the products. Now that’s what we call customer service.
The stock was already buoyed a day before when Shopify launched a tool so users could showcase and sell their products in the new shop section on Facebook Pages. Shopify added Twitter as another distribution option for its buy button on September 30, which pushed the stock up 6.4% to $35.81 compared with the day before.
The deal meant any product tweeted from a US merchant’s store would automatically include a buy button. Online stores could encourage shoppers to buy products directly from tweets in their timeline.
Results dayRevenues are up 90% as Shopify releases its first results as a listed company on July 30, pushing the stock up an impressive 11.7% by the end of the day. The stock keeps rising and hits a new high of $40.3 by August 3.
Shopify reported total revenue for the second quarter of 2015 was $44.9m, up 90% on the previous year, and helped along by much higher subscriptions from businesses. The company still made operating losses of -$3.5m but this was an improvement on the -$7m of losses reported a year before. Investors were, however, fairly impressed that the brand had reached more than 175,000 merchants over the year – processing $1.6bn of transactions during the second quarter alone, up by 100% annually and taking the total to $10bn.
That’s one hell of a shopping spree.
IPO dayShopify storms onto the New York Stock Exchange at $17 a share to raise $130m and is valued at $1.27bn. The stock quickly spikes to $28.74 during trading on its opening day before settling at $25.68.
The Canada-based e-commerce software platform was initially launched in 2004 as Snowdevil by Tobias Lütke, Daniel Weinand, and Scott Lake so they could sell their snowboarding equipment online. But they quickly found that their payments, marketing, shipping and customer engagement software were of use beyond the slopes.
They launched as Shopify in 2006 to provide snazzy technology so any small- and medium-sized business could get a website built without needing design skills and sell their goods and services online. Shopify was in the cloud before the cloud was even cool – when everyone probably thought you were just talking about weather. Finally businesses could manage a website, sales, marketing and deliveries from anywhere without needing their own software or pricy web servers.