The Canadian company Shopify (SHOP) is the tip of the spear when it comes to providing e-commerce business solutions to small and medium sized businesses. Shopify has been growing at a ridiculous pace with its recently announced 3rd Quarter revenue up 72% from 3Q16. Wall Street has taken notice too as SHOP is up nearly 150% in the past year!
Another thing that Shopify has going for it is that the type of service that Shopify provides comes with a high IT switching cost if a business were to move their entire e-business off of Shopify’s platform and to a competitor. Unless SHOP begins to fall behind technologically, most users will likely remain Shopify clients far into the future.
Like all individual stocks, Shopfity is not without its risks. I was first introduced to Shopify about a year and a half ago and it has done little besides go up since then. With that being said, there is already a ton of hype priced in to Shopify’s current stock price. There is always the possibility that it could disappoint in the near future and that would likely result in the stock price tumbling. Shopify was also a recent target of an analyst at Citron who made, in my opinion, outlandish and unsupported claims.
I view Shopify as a growth stock with tremendous upside potential over the next 5-10 years. Currently, Shopify is one of my larger holdings at roughly 5% of my overall portfolio. If you have a stomach for some volatility as Shopify turns profitable in the coming year, then SHOP could be a nice addition to your portfolio.