In a world in which e-commerce is steadily taking away market share from traditional bricks and mortar businesses in nearly every sector, this global trend has given rise to a number of high-flying technology companies such as Shopify Inc. (TSX:SHOP)(NYSE:SHOP) which look to fill gaps in the product offerings of firms such as Amazon.com, Inc. (NASDAQ:AMZN).
The ability for hundreds of thousands of small to medium sized businesses to put their offerings online via Shopify’s platform has changed the landscape of the e-commerce world in a recognizable way.
Shopify has stated its intent to increase the scope of its product offerings to become a giant of its own kind, providing an ever broader set of services to a clientele it hopes it will be able to keep for the long-term through a variety of customer retention and churn-negating strategic moves.
That being said, the reality remains that at a certain point, growth becomes more and more difficult, resulting in a forced diversification of sorts which is likely to permeate the company in a similar way as in Amazon’s earlier days.
Growth-oriented investors expect Shopify’s 68% year over year growth rate to continue for some time. With the bar remaining extremely high, Shopify’s management team will need to continue reaching higher in a way which can either set the company up for incredible long-term success and reward investors who have bought into the company at today’s extremely high valuations, or prove that Shopify’s current valuation has gotten ahead of its long-term earnings trend, a more likely scenario, in my opinion.
Invest wisely, my friends.
Related Stories
