Michael Smedley Shopify Inc. SHOP-T COMMENT Jan 18, 2018

It is growing at 20% per year but trading at 100X earnings so there is a valuation risk. It is a good company but not so much the stock. It uses different software for different vendors and expanding internationally. It could go sideways or down.

Very high valuation. On any fears of potential slowing, stock moves quite a bit. People probably trade it a lot. Great company, democratizing e-commerce for everybody. Tariffs may impact volumes until we get more clarity.

Still a decent runway to price target of $178, so don't trim. Look to trim if it gets above $170. Because of the volatility, writing some calls would be pretty lucrative.

Pay attention to the old highs (~$200), and stock's getting close to them. Recent peak does appear to be breaking the last one. Probably will get to the $200 area, so still a few bucks to go. From there, that's when to start chewing your nails, as it's stalled there before when those old buyers just want their money back.

A tough one. Lots of speculation in the name. If you look at it with a purely quantitative view, you'd be a bit nervous. Still in the high growth, ramping up operations, risky "startup" phase. Improving ROC. Valuation makes him pause.

Doesn't have a problem owning it, but should not be core. If your portfolio has 20 stocks, 5% each, then this one should only be ~2%. With today's earnings pop, good to trim.

He trimmed a bit. He'd beef up the position again if it dropped 10-15%. One of the companies that will dominate  the world for the next 1-2 decades. 

This type of company is out of his wheelhouse. He looks at cash flow; SHOP's free cash flow is too expensive. SHOP has been growing like gangbusters. He watches it, because it's significant in Canada. The changes in US taxation did not impair SHOP, surprisingly. Their business keeps going very well. Is a momentum name, but growth could slow and the street could focus on its cash flow down the road. The PE is rich.

Has been fantastic. Really good recent quarter. Right-sizing cost structure. Integrating with large-language-model search platforms, and so all searches essentially lead to Shopify. Taking advantage of AI, rather than being overcome by it.

"The NVDA of the North". Different businesses, but in the sense that everyone is flocking to that name. Very few tech names to own in Canada, so when we do find one it tends to get run up. In top 5 by market cap of TSX, and probably 6-7% of the entire TSX. That's huge.

Question now is "Does it deserve that premium valuation?" Reaching an all-time high. Very consumer driven. Expectations for growth are way too high. For her to look at it, would have to decrease by more than half. Too risky for her firm.

Fantastic business; however, has done well partly because it's one of a very few tech names in the TSX. Worries about valuation. Technicals are doing well -- higher highs and higher lows, above 200-day MA. But PEG ratio is over 3x. PE is about 90x, and forward is the same, for 30% growth rate. Any hiccups on meeting expectations, and the stock has a bit to fall.

Better risk-adjusted names elsewhere.