Shopify Inc. (SHOP.TO)

Great run. If you believe that e-commerce retail has a lot of legs (which he does), there are other ways to express that view. SHOP is stuck in the middle. Doubled off bottom, but faces structural issues of having to go up-market to enterprise customers, and AMZN is already there.

Moving up from micro-merchant is easier said than done. Being the UI layer and the feature layer is the most vulnerable part of the value chain that is global e-commerce. Tactically, he'd own AMZN.

E-commerce will still grow, but this trades at a high 55x PE. Prefers Docebo, which he owns.

She took profits on the recent runup. She likes to take profits when she can and doesn't get greedy. Quite volatile. Value is 1/10. Great e-commerce platform. Loves the story, but out of upside runway for now. Be patient for a favourable entry point.

Seems to be on a roll. He owns just a bit of it, and would advise investors do the same. Earnings forecast of $2 by 2029. Great business, but trades at 50x earnings 5 years out, very expensive. 

More focused, pruned non-core assets, now more about cashflow and organic growth. Heading in the right direction. Leveraging partnership with AMZN. Comes down to valuation. Generates free cashflow, but not that much, so multiple is really high (about 2x that of AMZN).

Momentum is in its favour. Let it run a bit more. Use a stop loss if you want to transition out.

Core business is doing very, very well. Beat expectations, cashflow's doing better. Metrics are getting better, and these will drive the stock over the next several years. Covid growth wasn't "real". Higher interest rates hurt. Sold assets not related to core operations.

SHOP reported EPS of 26c beating estimates of 20c and growing from 14c in the year prior. Revenue was $2.05B growing 21% (or 25% adjusting for the sale of the logistics business) year-over-year and beating estimates of $2.01B. Q3 revenue growth forecast is in the low-to-mid 20% range where analysts projected $2B (approx 17% growth). Gross Merchandise Volume (GMV) increased 22% to $67.2B. Merchant solutions increased 19% (to $1.5B) and subscription solutions increased 27% (to $563M) year-over-year. MRR increased 25% to $169M, driven by growth in merchants. Gross profit dollars grew 25% to $1.0B. Gross margin for the quarter was 51.1% compared to 49.3%. Free cash flow margin was 16% compared to 6% a year prior. This was a good 'get-right' quarter for SHOP following the prior weakness. Growth was driven by higher GMV, increased merchants, and increased penetration of Shopify Payments while profitability continued to expand. Guidance met expectations as well and we are happy with the results.  
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Canada is a good place to build a tech company, not to sustain it. Doesn't know why. SHOP has seen a sort of comeback lately. Brick and mortar will have a slow recovery, so SHOP's core e-business will continue to do well, but the initial excitement is over. But it's safe to hold onto it.

Going through more of a competitive challenge than historically. Over the next several years, e-commerce is getting more competitive with Shein and Temu. These 2, as well as ETSY, have been a big headwind for SHOP. 

A lot of small businesses in China were drop-shipping from China, using SHOP as the intermediary. But now they don't have to do that, as they can drop-ship directly. He likes AMZN in the space.

Likes it here, but they have to prove themselves. They missed a couple of times on earnings. 12-month price target of $105.

Will continue to own shares. Awaiting upcoming earnings results (expected to be strong). Recent market selloffs will be temporary. A good long term investment. 

Wonderful business. Great software that lets everyone be an online retailer. Doesn't see those tailwinds going in the other direction. As more people become online retailers, SHOP will be able to take a nice percentage of the assets. Did right by cost cutting, focusing on profitability, and so stock's picked up lately.

Hard to tell if it's worth the valuation. You can come up with a lot of scenarios where it makes a huge amount of money in the next 5-10 years, but he's not willing to pay up until he sees evidence of that.

See his Top Picks.

Hefty valuation. He tends to look to the US for tech names, that's where the leadership is. 62x forward earnings, 9.4x price to sales. Chart is concerning, as stock price is below 200-day MA, even though that average has been trending higher. Competitive pressure. 

Depends on small and medium businesses, which tend to be more affected by any bumps in the economic landscape. Plus, though diversified outside Canada, a lot of revenue comes from Canada, where we see some softening in the economy.

Stock's been re-rated by Bay Street and Wall Street. A lot of the worst has been priced in. Well run. Can control margins, so earnings and profits can get better. Expectations are so low, downside has been mitigated and even a marginal beat could make the stock really move. No dividend.

Valuation does matter, and it's now more digestible given where the stock price is.

Big tumble recently. Priced for perfection at 100x earnings, so everything better go well. Forecast for growth was light, from low 20s to 18%, enough to knock it down dramatically. Still expensive at 12x revenue.

Many other companies growing in high teens that you can buy for much more attractive valuations.