Currently trading at a stock price around $150 per share, Canadian e-commerce company Shopify Inc. (TSX:SHOP)(NYSE:SHOP) has made many investors who got in early very, very rich. The provider of e-commerce solutions to small and medium-sized businesses has seen its share price appreciate by more than 150% year to date, and nearly 325% since its initial public offering (IPO) a little more than two years ago.
Such rapid growth in the tech company’s share price has been accompanied by sky-high revenue growth rates and valuation mutiples. With the company’s forward valuation multiple continuing to expand, many cautious investors including myself have taken a step back to look at other exciting opportunities which have not seen their share price grow so abruptly. While the company indeed has strong momentum behind it, the question of just how high a price is too much for investors remains to be seen here.
The company’s key growth drivers appear to be centered around the ability of the company to: (1) continue to eat away at a global market share pie which is not only expanding, but is exponentially larger than Shopify’s current merchant base of just over half-a-million consumers; and (2) to continue to invest in developing its platform at a pace which will provide the company with enough of a competitive advantage so as to effectively fend off competition for the foreseeable future.
While valuation concerns remain, Shopify’s growth profile is indeed second to none. Just be careful.
Invest wisely, my friends.
