Shopify stock analysis (October 2023)

Should you buy Shopify stock? Ticker: SHOP Join 10,000 investors: https://www.overlookedalpha.com/youtube At the current share price, Shopify has a market cap of 69 billion dollars. It’s got 7.9 billion of cash and investments and 900 million of debt so the enterprise value is 62 billion. Revenue over the last 12 months comes to 6.3 billion but the company is still not profitable. Adjusted ebitda is negative 1.6 billion and net income was minus 2 billion. Some of those losses come from a significant amount of stock based compensation – around 700 million over the last 12 months. And that will continue to dilute value going forward. So Shopify stock is currently valued at 10 times revenue, 500 times free cash flow and we can’t measure the PE ratio because the company is producing negative earnings. Does this mean Shopify’s business model is broken? Well no. 20% of revenue is being spent on sales and marketing and 40% on R and D. So Shopify is still investing for future growth, and it’s had a lot of success in doing so. Revenue grew 86% in 2020, 57% in 2021 and 21% last year and there’s plenty more room to expand. However, to stay competitive Shopify needs quick delivery times. Its 2 billion investment in fulfilment network Delivver was a failure and had to be sold at a loss. Instead, Shopify is partnering with Amazon’s fulfillment network by allowing the Buy with Prime button across the Shopify network. #shopifystock #stocks #investing #stockstowatch #overlookedalpha