3 Reasons to Buy Shopify Stock Like There’s No Tomorrow

Looking for a new stock pick to take advantage of the market’s newfound strength? Consider stepping into a stock Shopify (NYSE: STORE). It’s a right place/right time possibility… something all investors were reminded of on Tuesday. Fortunately, it’s not too late to jump in.

What is Shopify?

If you’re reading this and don’t know, Shopify helps businesses of all sizes start and run a business. e-commerce presence Shopify can offer almost anything, from online shopping carts to payment processing, inventory management tools, marketing support (and more). It monetizes its technology on a subscription and per-transaction basis.

But to fully appreciate the power and potential of Shopify, you must understand the “why” of its existence. In the simplest terms, this un-AmazonIt offers an alternative way to sell online for sellers who don’t want to be tied to North America’s largest online shopping mall.

Amazon wasn’t always seen in this frustrating position. In its early days, sellers loved the access it could provide. However, as can be expected, the platform has become quite crowded. Amazon itself has begun to compete head-to-head with many of its sellers.

That’s why many sellers and brands are increasingly exploring alternative online sales options. Many choose Shopify. Not only does this choice ultimately cost sellers less, it also allows these users to build their own direct relationships with consumers. Although the company no longer discloses the specific number of sellers using its services, most estimates place the figure at between 2 and 4 million.

Regardless of the estimated number of paying merchants, Shopify discloses some key financial metrics. For example, in the recently ended quarter, the company facilitated the sale of $69.7 billion worth of merchandise, turning it into approximately $2.2 billion worth of revenue for itself. Both figures are significantly higher than previous year comparisons. In fact, that’s just a small part of the first of three reasons why you might want to buy a piece from this company ASAP.

The story is interesting, of course. But so were the stories behind it Groupon, goproand Blue Apron. Property alone doesn’t pay the proverbial (and real) bills. What makes Shopify a must-have investment here and now? Among many reasons, three reasons stand out.

1. Grows reliably

As noted, last quarter’s top lines were on the rise, and in no small part. Revenues 26% improvement Year over year, the company’s operating income more than doubled and free cash flow increased from $276 million in the third quarter of last year to $421 million in the three months ending in September of this year. This is quite impressive considering the lethargic economic environment and moderate consumption trend.

STORE Revenue (Quarterly) data Y Charts

What makes this performance even more impressive is that the latest quarter was the sixth consecutive quarter in which revenue increased by more than 25% (not taking into account the logistics business the company recently sold).

2. Shopify’s service is exactly what merchants need right now

There’s a reason this company is doing the seemingly unthinkable: The options Shopify offers merchants, brands, and independent sellers are exactly what they want and need at this point.

In the infancy of e-commerce, platforms such as Amazon and eBayIt met a need that most vendors couldn’t meet on their own. But the online shopping arena has evolved. With the passage of time, the lines between entertainment and commerce and information have blurred, thanks to the emergence of social media and the constant development of web marketing tools. Many brands can now find their own customers rather than relying on a third party to do this heavy lifting.

All these merchants need is a way to turn web traffic into a transaction. This is where Shopify shines.

3. The opportunity is huge

The problem is that no matter how much the online market has evolved since its early days, there are still plenty of growth opportunities ahead.

This seems almost incredible given the known size of the e-commerce market, but the U.S. Census Bureau says only 16% of U.S. consumers retail Sales are made online. The remaining 84% is still made in-store. Worldwide numbers are on the same playing field. Although there are some retail sales that may never be made online, a large portion of existing brick-and-mortar sales can still become e-commerce businesses.

Accordingly, market research team Straits Research predicts that the global e-commerce software market will grow at a rate of over 12% annually until 2032. Shopify is in a position to capture much of this growth, especially as the environment heats up. We will touch upon their foreign and international efforts.

Be smart but don’t be stubborn

Anyone reading this probably knows that Shopify shares rose on Tuesday in response to its impressive third-quarter report and encouraging guidance. Specifically, the company expects “revenue to grow at a rate in the mid-to-upper twenties” and gross profit to grow at a similar rate.

Problem? The post-earnings bounce was so strong that it left shares uncomfortably vulnerable to profit-taking pressure. It wouldn’t be wrong to let the rally cool down a bit and find basis around this stock’s new price.

Just don’t stay on the sidelines for too long. This stock is no stranger to such moves. Several similar jumps have been recorded since stocks began to rebound in mid-2022. None of these have been too problematic to allow the long-term rally to reignite.

Don’t miss this second chance at a potentially lucrative opportunity

Have you ever felt like you were missing out on buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our team of expert analysts publishes a report. “Double Down” stock Advice for companies they think are about to implode. If you’re worried that you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

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We’re currently issuing a “Double Down” warning for three incredible companies, and another chance like this may not come anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of November 11, 2024

John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a board member of The Motley Fool. James Brumley It has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Shopify. The Motley Fool recommends eBay. The Motley Fool has a feature disclosure policy.