Shopify is a leading e-commerce company that provides an all-in-one platform for businesses to sell their products and services online. Over the years, Shopify has experienced a surge in demand for its services, thanks to the rapid growth of e-commerce. With the COVID-19 pandemic forcing many businesses to shift their operations online, Shopify has been at the forefront of helping businesses transition to e-commerce.
As a result, Shopify has become one of the most successful e-commerce companies, with its stock price consistently outperforming the broader market. In this article, we will discuss why Shopify stock is a promising investment opportunity.
Overview of Shopify
Shopify was founded in 2004 by Tobias Lütke, Daniel Weinand, and Scott Lake in Ottawa, Canada. The company began as an online snowboarding equipment store, but the founders soon realized that the e-commerce platform they had built was the real opportunity. They pivoted to focus solely on building the platform and began offering it to other businesses.
Today, Shopify has grown to become one of the largest e-commerce platforms in the world, serving over 1.7 million businesses in more than 175 countries. The company’s mission is to make commerce better for everyone by providing businesses with the tools they need to succeed online.
Shopify’s Business Model
Shopify’s business model is simple. The company provides an all-in-one e-commerce platform that allows businesses to create online stores, manage their inventory, process payments, and ship products to customers. Shopify charges a monthly subscription fee for access to the platform, as well as a transaction fee for each sale made through the platform.
Shopify also generates revenue from its various add-ons, such as its Shopify Payments service, which allows businesses to process credit card payments directly through the platform. The company also offers various other services, such as website design and development, marketing and advertising, and shipping and fulfillment services.
Why Shopify Stock Is A Promising Investment Opportunity
Rapid Growth in E-commerce
E-commerce has been growing rapidly in recent years, and the COVID-19 pandemic has only accelerated this trend. In 2020, e-commerce sales grew by 27.6% worldwide, and this growth is expected to continue in the coming years.
As a leading e-commerce platform, Shopify is well-positioned to benefit from this growth. The company’s platform is easy to use and provides businesses with all the tools they need to succeed online. With more businesses looking to sell their products and services online, Shopify is likely to see a surge in demand for its services in the coming years.
Strong Financial Performance
Shopify has been consistently delivering strong financial performance in recent years. In 2020, the company’s revenue grew by 86% year-over-year, while its gross merchandise volume (GMV) grew by 96% year-over-year. The company’s subscription solutions revenue grew by 48% year-over-year, while its merchant solutions revenue grew by 117% year-over-year.
The company’s strong financial performance can be attributed to its growing customer base and its ability to generate revenue from its various add-on services. With Shopify’s customer base continuing to grow, the company is likely to see continued strong financial performance in the coming years.
Expansion into New Markets
Shopify has been expanding into new markets in recent years, which has helped to diversify its revenue streams. For example, the company has been expanding into the fulfillment and shipping market, which allows it to provide end-to-end services to its customers.
Shopify has also been expanding internationally, with the company now operating in over 175 countries