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I've owned it in the past but no longer have any (sold to help fund a RE purchase)

I really like their products. Which is a good start. They have integrated the whole e-commerce supply chain under one umbrella and made it nearly seemless and veru user friendly. Very functional. They've run up recently but I don't doubt the sector still has room to grow as more and more business turn to e-commerce platforms. Notably they've recently integrated into Amazon and I feel like this will drum up up a lot of sales. Great for their direct customers and good for them.

Do as you please but you gotta love them for being Canadian tech players!
 

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The best performing stock in Canada, which barely ever gets a mention on this board. Look at this dead thread, not a single post since 2017. In this time, SHOP has gone up 13x.

Shopify is now the third largest company in Canada by market value, and soon could be worth more than TD Bank:

RY $125 billion
TD $103 billion
SHOP $97 billion
ENB $84 billion
CNR $80 billion

It's possible that COVID-19 is accelerating a move that was already underway: moving merchants online (using the Shopify platform) and away from brick & mortar business.

Or is the stock in just some kind of momentum / price bubble? That's what makes the business world so fun... you get to figure out whether you think this is a silly bubble stock, or the real thing: the emergence of a new giant in the economy.

Those using 5-pack and 6-pack type of investments generally ignore new companies like this, and stick to the old (traditional) favourites. In fact, many Canadian investors omit the tech sector entirely!
 

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Valuation is pretty crazy. It might have a bigger market cap than TD, but TD's net profits are almost 7 times more than Shopify's revenue. Shopify has never posted an annual profit.

I'll remind the viewers that the vast majority of successful technology companies actually do post profits. Facebook and Google both had big fat annual profits before going public. Shopify are growing at any cost and are only able to do so by issuing more shares and raising new capital.

It may work out for them, but the jury is certainly not out, and if a big tech company decides to take a run at their business line, they could suffer quite a bit. Much like other tech darlings of Canada's past.
 

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Yup, Shopify is now worth more than TD. It's now the second most valuable company in Canada, only behind RBC.

At the same time we're watching the "physical" economy collapse (oil prices are suggesting a Depression) perhaps we are witnessing a historic shift to the digital economy. Maybe Shopify emerging as a Canadian giant is an indication of this "paradigm shift"?

It's really hard to know if that's what's going on, because it could also be stupid overpricing of SHOP that is unjustified. But how exciting! Is this a paradigm shift and transformation of the economy, or just stupid mispricing?
 

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I was thinking of this today, I hear Shopify is actually great, and their pricing is very competative.

There is competition, but they're clearly one of the global leaders.

That being said, I'm not sure the valuation makes sense, of course I said that when AMZN was "only" at $400/share.
 

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Revenue up 50%. Negative operating income up 100%. They will grow revenue and make up the negative margin on volume.
 

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I'm looking at their financial statements ending March 31. While their profit is up 43% versus last quarter, their operating expenses were up 53%. In fact, their quarterly net loss worsened. This story is even worse with Comprehensive loss.

The Comprehensive loss figure is the more important one as it includes effects of various hedges they are using for managing the business. Last quarter, their comprehensive loss was $15 million and this quarter it's worsened to $48 million loss.

Part of the reason those numbers are so bad is that they are giving a ton of stock-based compensation. Last quarter, $31 million and this quarter, $54 million in stock compensation expenses. Yikes! Think of it this way. They would be profitable, except they are paying out all net earnings in stock compensation. They did the same thing last quarter too.

Last quarter: $31 million stock comp, $15 million net loss
This quarter: $54 million stock comp, $48 million net loss

I'm not sure why that's such a great result for a shareholder. In fact even if we exclude the stock compensation, their income this quarter is still worse.

Volume was up tremendously. If their business machinery was working so well, we'd be seeing a narrower loss -- not a larger one! I think SHOP would be really exciting if their income was consistently becoming more positive, but that's not what's happening.

On the plus side, they have stellar liquidity, no debt. This is a pretty "low risk" company, meaning low risk of the company failing, and no reliance on debt.
 

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Yup, Shopify is now worth more than TD. It's now the second most valuable company in Canada, only behind RBC.

At the same time we're watching the "physical" economy collapse (oil prices are suggesting a Depression) perhaps we are witnessing a historic shift to the digital economy. Maybe Shopify emerging as a Canadian giant is an indication of this "paradigm shift"?

It's really hard to know if that's what's going on, because it could also be stupid overpricing of SHOP that is unjustified. But how exciting! Is this a paradigm shift and transformation of the economy, or just stupid mispricing?
now the #1 most valued company in Canada

 

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Unbelievable! According to Yahoo Finance

SHOP $121.3 billion
RY is worth $120.5 billion
TD $102.7 billion

Mind boggling
 

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... It's really hard to know if that's what's going on, because it could also be stupid overpricing of SHOP that is unjustified. But how exciting! Is this a paradigm shift and transformation of the economy, or just stupid mispricing?
Or it could be bits of both ... nothing says it has to be one or the other exclusively.


Cheers
 

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James.....are you old enough to have lived through Nortel and RIM? I suspect the different generations will have wildly different views on SHOP until proven otherwise.

I worked near a Bell office early in my career.....many of the employees kept their Bell shares in our vault. Eventually Bell spun off Nortel and for a few years, these regular folk saw dramatic increases in their personal net worth (on paper). They’d talk about it every time they went in and stored away their Bell shares. Can’t imagine the wealth that was lost. As a youngster, I thought I was smart paying $5 a share (on the way down) for Nortel......lost $1500 and didn’t know better to claim the capital loss. Ah youth!
 

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James.....are you old enough to have lived through Nortel and RIM? I suspect the different generations will have wildly different views on SHOP until proven otherwise.
Yes I'm old enough. I started investing around 2000 and was studying engineering at the time. Some friends of mine had internships at Nortel and people talked about the stock a lot. Some had bought NT shares, but I didn't.

RIM was even better since I lived in Waterloo during the crazy years. I watched the whole city transformed to RIM town... the parks, events, everything was RIM branded and funded. RIM actually funded the lab I worked in. My advisor was on RIM payroll and nearly everyone I knew worked there!

People wouldn't shut up about RIM and Blackberry and I was actually very relieved when the stock imploded and everyone stopped talking about it all the time.

But I think one should also be cautious about writing off a stock just because of a booming share price and value. AAPL and AMZN are two other instances, which for a long time, looked like stupid bubble stocks. Apple basically had a flashy, fashionable toy product (iPod and early iPhone) which many people bought due to the fad. I asked my girlfriend at the time why she wanted an iPhone and she giggled and said, "it looks cool and it's white". And there really is an Apple cult.

AMZN had no earnings for a very long time, and I even saw a PhD thesis trying to analyze what the deal is with AMZN. Nobody could make sense of the disconnect between their financial results and continuing stock trend.

AAPL or AMZN could have easily turned out to be dumb, momentum driven stocks. Today, market caps of AAPL and AMZN are $1.2 trillion and $1.3 trillion. In comparison, the largest bank stock JPM is barely worth $0.3 trillion.

FB is another example, which still seems like a stupid fad to me. The platform basically looks like a busy Myspace experience that's full of politics and junk advertising. I find it disgusting and most of my friends don't touch it. Who knows if it has lasting power?

So what I'm saying is that if you look at a group like AAPL, AMZN, FB, RIM, NT, SHOP -- it's very difficult to separate out which are transforming the world (the real deal) vs overvalued bubbles.

Recognizing which stock is dumb, and which is the real deal, is easy in hindsight. I don't think it's so clear in real-time. So the question remains... does SHOP really have a strong future in our new economy? I have no idea.

(Below: a Halloween costume after the RIM crash)
20153
 

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I had a co-op term with Nortel. It was right at the peak. People were talking about whether to buy before or after stock splits. The plant I was working at got sold off to a third party manufacturer.
Once I graduated, I was offered a job with RIM that came with options. I didn't take the job because I didn't know anyone within 2 hours of Waterloo. Had I taken it and kept the options until the top, I would have been a multi millionaire before 30.

I like SHOP as a client, but it's hard to justify as an investor. There's really no moat for other companies to enter, unlike RIM and Nortel which had patents and technology. Some say Huawei is where they are because they stole everythign from Nortel, but that's another story.

Maybe SHOP manages to focus on costs and gets rid of the stock options and compensation and can start turning a profit. Even if they do make profit, I can't see it ever being high enough to justify a reasonable multiple. You could take a look at their number of paying clients and how much you'd have to raise fees to make a reasonable profit and justify a P/E of something like 40-50. I bet it's impossible.
 

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Yes I'm old enough. I started investing around 2000 and was studying engineering at the time. Some friends of mine had internships at Nortel and people talked about the stock a lot. Some had bought NT shares, but I didn't.

RIM was even better since I lived in Waterloo during the crazy years. I watched the whole city transformed to RIM town... the parks, events, everything was RIM branded and funded. RIM actually funded the lab I worked in. My advisor was on RIM payroll and nearly everyone I knew worked there!

People wouldn't shut up about RIM and Blackberry and I was actually very relieved when the stock imploded and everyone stopped talking about it all the time.

But I think one should also be cautious about writing off a stock just because of a booming share price and value. AAPL and AMZN are two other instances, which for a long time, looked like stupid bubble stocks. Apple basically had a flashy, fashionable toy product (iPod and early iPhone) which many people bought due to the fad. I asked my girlfriend at the time why she wanted an iPhone and she giggled and said, "it looks cool and it's white". And there really is an Apple cult.

AMZN had no earnings for a very long time, and I even saw a PhD thesis trying to analyze what the deal is with AMZN. Nobody could make sense of the disconnect between their financial results and continuing stock trend.

AAPL or AMZN could have easily turned out to be dumb, momentum driven stocks. Today, market caps of AAPL and AMZN are $1.2 trillion and $1.3 trillion. In comparison, the largest bank stock JPM is barely worth $0.3 trillion.

FB is another example, which still seems like a stupid fad to me. The platform basically looks like a busy Myspace experience that's full of politics and junk advertising. I find it disgusting and most of my friends don't touch it. Who knows if it has lasting power?

So what I'm saying is that if you look at a group like AAPL, AMZN, FB, RIM, NT, SHOP -- it's very difficult to separate out which are transforming the world (the real deal) vs overvalued bubbles.

Recognizing which stock is dumb, and which is the real deal, is easy in hindsight. I don't think it's so clear in real-time. So the question remains... does SHOP really have a strong future in our new economy? I have no idea.

(Below: a Halloween costume after the RIM crash)
View attachment 20153
I found my old Blackberry Bold in my cleanup today. Powered it up. It’s password locked and I can’t remember the password. Do these things even have wifi capability? I don’t recall wifi (outside of the house) even being discussed 10 years ago.
 

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I had a co-op term with Nortel. It was right at the peak. People were talking about whether to buy before or after stock splits. The plant I was working at got sold off to a third party manufacturer.
Once I graduated, I was offered a job with RIM that came with options. I didn't take the job because I didn't know anyone within 2 hours of Waterloo. Had I taken it and kept the options until the top, I would have been a multi millionaire before 30.

I like SHOP as a client, but it's hard to justify as an investor. There's really no moat for other companies to enter, unlike RIM and Nortel which had patents and technology. Some say Huawei is where they are because they stole everythign from Nortel, but that's another story.

Maybe SHOP manages to focus on costs and gets rid of the stock options and compensation and can start turning a profit. Even if they do make profit, I can't see it ever being high enough to justify a reasonable multiple. You could take a look at their number of paying clients and how much you'd have to raise fees to make a reasonable profit and justify a P/E of something like 40-50. I bet it's impossible.
it seems its hard to stock pick in tech until you’ve missed the boat. Better to buy a tech basket or index and see what happens....although people are doing it with Apple and amazon still and making money.

I got caught up in the tech bubble in the late 90s as an entry level bank teller. we placed trades by phoning in....did web trading exist? can’t remember. Anyway, some of the tellers use to call the trading desk while serving clients....you’d be on hold 5-15 mins anyway.
bought into a company called USA video. Had a client who was correctly predicting the trading price week after week. Think we started buying at $0.13. Guy kept calling the price all the way up To $15. Blockbuster is gonna buy them and ”stream” movies right to your home. Don’t think we used the word streaming, but you get the idea. “It’s going to $30”.
of course, it didn’t...and we continued to buy all the bay down as it crashed to nothing. I think someone bought them (oculus?)......but it’s basically worthless today.
 

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A little known fact about stocks is that, of all the stocks which are ever created and listed, MOST turn out to ultimately be worthless. There's only a small % of stocks which ever perform well. I can't remember the stats from the study I read, but a shockingly tiny % of stocks ultimately outperform cash.

Another little known fact is that indexes such as the TSX and S&P 500 actually have a human review committee. They do screen stocks, and manage the portfolio. So "indexing" is actually professionally run portfolio management. Except, it's very low cost and very low turnover.
 
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