Shopify Inc. (SHOP.TO)

He owns it in the aggressive platform. They also have a more conservative equity platform. He bought it on the trend line. It is coming into its old high which is a point of resistance. It is OK but don't buy today.

SHOP is trading at 11.1x Forward Price/Sales. It is not cheap, but the valuation has come down to a more reasonable range for a high-quality name. The company is at the tipping point of being profitable. Stock-based compensation has been under control recently along with a healthy growth rate in its operating cash flows. SHOP seems to be on track to become a compounder again. Based on consensus estimates, it is expected to grow its revenue by more than 20% over the next few years. We think it is at a good price to add some here, but not too aggressively. We would be nimble to add to SHOP over time when opportunities present themselves. 
Unlock Premium - Try 5i Free  

He bought it during the August tech sell-off. They like their growth profile. Cash flow is breaking even. Expensive on sales and earnings bases, but less so now. Small vendors still need their services. Offers long-term growth with potential. 

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.  
Unlock Premium - Try 5i Free

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.