Shopify (TSX:SHOP) is constantly one of the most talked about stocks in Canada. I believe there’s a good reason for that. It’s a leader within the rapidly growing e-commerce industry. However, it hasn’t been all sunshine and rainbows for this stock. There are many out there that believe Shopify’s best days are behind it.
In this article, I’ll discuss whether Shopify stock is a good buy today.
Shopify’s business
As a quick reminder, Shopify offers a platform and many of the tools necessary for merchants of any size to operate online stores. As a merchant, you can get started on your e-commerce journey for as little as $5 per month. The breadth of its offering makes it a viable solution for everyone from the first-time entrepreneur to large-cap enterprises. Some of Shopify’s largest customers include the likes of Netflix, Figs, and Gymshark.
Shopify has also done a great job of attracting strategic partners, which could make its platform even more appealing to merchants. As it stands, Shopify is partnered with the likes of Google, Apple, Meta Platforms, Snapchat, and many more. As the Shopify ecosystem continues to expand, merchants could find more and more value in turning to Shopify to host their online stores.
How has the company performed recently?
In terms of financial performance, Shopify has been outstanding as of late. In the second quarter (Q2) of 2023, Shopify reported US$1.7 billion in revenue. That represents a 31% increase compared to the same period last year. Much of that revenue came from an increase in subscriptions. Shopify reported US$444 million in subscription solutions revenue for the quarter, which represents a 21% increase compared to Q2 2022.
These successes in Shopify’s financials have resulted in an upwards trend in the company’s stock. Year to date, Shopify stock has gained nearly 62%. Although the stock still sits more than 60% lower than its all-time highs, I believe it’s moving in the right direction. Given the traction that the company has, and the potential growth available in this space, I think there’s a lot to like here.
Would I buy shares of this company today?
Shopify currently sits as one of the largest positions in my portfolio. Given the company’s recent financial performance and the position it has within the e-commerce industry, I would be very comfortable adding to that position today. Shopify is a leader within a massive and growing space. If it can continue to operate at a high level, then I could see investors doing well from this point forward.
It should be noted that Shopify continues to be led by its founder, Tobi Lütke. Given that founder-led companies tend to outperform companies led by non-founders, that should give investors a bit more reassurance in the company. In my opinion, Shopify is a major buy today. If you’re looking for a solid Canadian growth stock to add to your portfolio, Shopify is definitely a company worth considering.
