More shoppers are staying at home due to the novel coronavirus. As such, Shopify (NYSE:SHOP) stock presents potential for growth since the company continues to provide a robust e-commerce platform in these less-than-practical times.
Prior to the onset of the coronavirus, Shopify demonstrated impressive earnings growth. The COVID-19 crisis had undoubtedly created a number of challenges. However, Shopify has been proactive and responsive during this difficult time.
If you believe that e-commerce will remain essential to the economy, Shopify stock deserves a place on your shopping list.
Strong Fiscal Results
Prior to the coronavirus pandemic, Shopify was practically unstoppable. The same could be said about the stock price. Amazingly, the stock had moved from the $200 level to more than $500 in the span of a year, with the winning streak ending in late February.
Tobi Lütke, Shopify’s chief executive officer, had every right to boast about the company’s fast-expanding merchant pool. “2019 was a milestone year for us,” said Lütke, adding, “We’ve earned the trust of more than one million merchants, and we are motivated more than ever to keep lowering the learning curve so anyone, anywhere can become an entrepreneur.”
Indeed, 2019 was a power-packed year for Shopify. Full-year revenues amounted to $1.5 billion. That represents a whopping 47% increase over the prior year’s revenues. Moreover, Shopify’s 2019 gross profits were $865.6 million. That figure signifies a 45% improvement over 2018’s gross profits.
We can only imagine how much money Shopify would be making today if it weren’t for the coronavirus. Within the span of just one year, the company added 13 native languages to its platform and introduced Shopify Payments to four additional countries. Also during that time, the company launched Shopify Email and Shopify Chat. Furthermore, it acquired warehouse-fulfillment-solutions provider 6 River Systems.
Responsive Amid the Crisis
In hindsight, we all now know that Shopify’s momentum was to be cut short by the coronavirus outbreak. Still, the stay-at-home trend won’t necessarily impact e-commerce the way it has affected the brick-and-mortar retail sector.
The extent of the virus’s economic impact has yet to be fully assessed. What we can say with confidence, though, is that Shopify has already proven itself to be a proactive business during the crisis.
The measures taken by Shopify amid the coronavirus’ spread have been swift and extensive. This is precisely the type of decisive action a shareholder should want to see in a company. Shopify’s proactive measures could build goodwill among the community and are likely to enhance shareholder value over the long term.
First of all, the company is working with governments to provide $200 million in small-business funding through Shopify Capital. Moreover, the company is enabling merchants using Shopify POS to offer in-store/curbside pickup to their customers for online orders.
Additionally, for all new and existing plans, Shopify is allowing merchants to free up cash flow by offering both physical and digital gift cards. Plus, Shopify has extended its usual 14-day free trial to 90 days. These actions not only help the community, but could also entice new business owners into the company’s vast pool of merchants.
The Final Word on Shopify Stock
Coronavirus-induced market volatility could persist for a while. However, while the endpoint is uncertain, we can say with confidence that Shopify is responding swiftly and appropriately. Investors in Shopify stock should rest assured that the company can continue to move forward even during a time of crisis.
Louis Navellier had an unconventional start, as a grad student who accidentally built a market-beating stock system — with returns rivaling even Warren Buffett. In his latest feat, Louis discovered the “Master Key” to profiting from the biggest tech revolution of this (or any) generation. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.