David BaskinShopify Inc.SHOP.TOCOMMENTNov 18, 2015

Great story. Valuation has come down since last year. Caught an upgrade this morning. Q2 was great, Q3 looks impressive. Doing everything right. Agentic ambitions. You really have to use the chart, as it's always so pricey.

Trading ~40x PE for 2028, growing 25%. Not that bad (compared to a CRWD or a TSLA). In the realm that you can buy it. Use rough periods like now to add quality names like this.

12-month price target of $171. Great example of an e-commerce company that's harvested the power of agentic AI. Caters to small- and medium-sized companies, who can't do agentic AI themselves. But they can go to SHOP, who can spend the $$ and then recoup it via its massive consumer base. 

Excellent liquidity. Negligible debt. Great ROE of 15.5%. High valuation of 104x PE, but it reflects the great growth rate. No dividend.

Their valuation is always too high, now 100x PE. They've had a positive return on capital for 3-4 years in a row, but is not high or consistent. He would consider SHOP if shares fell 75% and the PE was 25x.

Delivered a monster quarter, showing its resilience to AI movement. Its software was built to be more friendly to an agentic future. The agentic push has resulted in more businesses being started, and these are all potential customers for SHOP. Susceptible to consumer spending patterns. Great company, best CEO.

Tariffs: their end users, not Shopify, pays them. But SHOP can help customers manage and calculate tariffs.

Unique business, unique spot. Most recent quarterly results were really strong, and expectation is that will continue. Valuation is very expensive, with very low FCF yield. It's a momentum name -- as long as topline can keep up, valuation will stay strong. Once they start to miss, valuation will come off. Risk/reward is about equal, he'd pass.

They had a strong quarter. As long as earnings grow, shares will rise. But the PE is high so if there's a miss or stumble, shares will fall sharply. There's margin improvement and so far they are executing.

Fabulous business, but overvalued. Has done OK this year, but off quite a bit from highs. Bounces a lot. Doesn't really make a lot of money for the cap size it is. AI will enhance its productivity.

Fear that AI threatens its business. Beat last quarter, revenues were up 34%. Margins were fine. Really getting into agentic AI-powered searches. International upside. 21% earnings growth, trading ~33x PE -- very enticing.

Nicely base-building. Struggled in the first half of the year, bottomed out in May. Since then, steadily higher highs and lows below a fixed resistance level (an "ascending triangle"). The pattern hasn't completed, but it's emerging and looks encouraging.

200-day MA starting to trend a bit lower, price is also below that. High multiple at 60x forward PE, though growth rate is strong, but PEG a bit rich at around 2x. Leaves little room for error. Caters to economically sensitive small-middle companies. AI is both opportunity and risk.

Better opportunities elsewhere.

Under pressure with all software stocks, but not justified. It's an operating system for retailers, which is needed no matter what. Very attractive here. She prefers cyber stocks.

A great company. The issue was that the stock was very expensive, but they dominate the space with Amazon and continue to gain market share. SHOP could take market share in Europe. If this is not a buy for the next year, over 5-10 years, this is a magnificent stock.

Recent earnings saw sales growth of nearly 40% and management guided from slower growth, so shares go hit. Investors are reluctant because of SHOP's high PE. The fundamentals are there and they are poised for AI. Is solid for the long term.

Are different: CSU buys companies vs. Shopify which is a pure tech company. What PE do you want to pay for CSU? 25x? 20x? SHOP is great and continues to grow. The market perception of AI hurting these companies is wrong. Both are worth buying. He prefers CSU but buy it at a lower PE.