Conservative value investors confused primarily on the fundamentals and historical earnings/future earnings potential of various companies as the primary criteria for investment may have given up trying to understand the current valuations of technology growth companies such as Shopify Inc. (TSX:SHOP)(NYSE:SHOP). While I would certainly include myself in such an investor profile, I do understand the bullish case behind why Shopify could continue to soar.
Shopify’s business model, as a key pillar of the e-commerce revolution underway in providing essential infrastructure to support the online presence of small and medium-seized enterprises (SMEs) as well as large corporations, should not be under-estimated in any way. The growth in the segment is astronomical, and has only been sped up by the covid-19 pandemic which has tragically forced many businesses to move quickly to adopt a mixed ecommerce/brick-and-mortar business model, or convert completely to online only sales.
This secular growth momentum is only likely to continue to increase over time, providing an excellent backdrop for Shopify’s future profitability growth via a very long runway for such growth as well as a myriad of potential verticals not yet explored by the company as of yet. The exponential growth we’ve seen with Shopify could still accelerate, given we’re still at the early phases of this business cycle, so investors must balance this growth potential against is current valuation when making investment decisions.
Invest wisely, my friends.
Tech Insider
