Why Shopify Is the Ultimate Future-Proofed Investment

It might seem like the whole world ended when the novel coronavirus battered the stock market. E-commerce withstood the crisis better than most sectors, however. And shareholders of e-commerce leader Shopify (NYSE:SHOP) stock didn’t have to struggle for long.

Why SHOP Stock Is the Ultimate Future-Proofed Investment
Source: Burdun Iliya / Shutterstock.com

Indeed, the rapid W-shaped recovery in SHOP stock is emblematic of e-commerce’s strength during the pandemic. But there’s more to the story than strength during a crisis. Shopify is taking actions today that will ensure the company’s prosperity, even after the coronavirus crisis subsides.

That’s what future-proofing is all about as proactive measures are a must in a rapidly changing economic landscape. Shopify’s proving time and again that retail isn’t dead. It’s just different now.

No Slowdown in Revenues

While a handful of traditional retailers are considering drastic measures, such as bankruptcy proceedings, Shopify is already looking forward to a sensational year. And if the rest of 2020 resembles Shopify’s first quarter, then the shareholders have nothing to worry about at all.

How good was the first quarter for Shopify? We can let the numbers do the talking here. For one thing, Shopify’s quarterly revenues increased by a whopping 47% to $470 million. That’s during a global pandemic, mind you.

Quarterly revenues for Shopify’s Subscription Solutions segment rose to $187.6 million, representing a 34% year-over-year improvement. Meanwhile, the company’s monthly recurring revenues expanded by 25% on a year-over-year basis to $55.4 million.

Perhaps most impressive of all was Shopify’s Merchant Solutions revenues. At $282.4 million, this segment experienced a 57% increase in the first quarter when compared to the first quarter of the previous year.

Clearly, merchants are more than happy to invest in Shopify’s platform, even when they might be low on available capital. When the economy picks up again, the company’s profitability should continue and so should the momentum in SHOP stock.

As O’Shares ETFs President and CEO Connor O’Brien put it, “Shopify is growing at a tremendous rate.” If anything, the coronavirus-induced shutdowns may have benefited Shopify in an time when reliance on e-commerce is increasing.

Headfirst Into the Future

For the world of e-commerce, the rate of change is highly accelerated. And for traditional retailers who dragged their feet, the coronavirus shutdowns forced them to either move into the present or get left in the past.

Staying stuck in the past, however, isn’t really much of an option anymore. As Shopify COO Harley Finkelstein explains, the shift to online commerce during the pandemic was swift and sizable: “The retail world that would have existed in the year 2030 has been pulled into 2020. Brick and mortar retailers that were thinking of moving online have done so at an incredible clip over the last 8-10 weeks.”

It’s almost as if Shopify has been waiting for this moment to arrive. The company couldn’t possibly have anticipated the coronavirus crisis, of course, but Shopify’s business model has undoubtedly benefited from social distancing and shelter-in-place mandates.

So, what’s next for Shopify and how is the company continuing to stay several steps ahead? One savvy move is Shopify’s foray into the grocery-delivery market. The fusion of e-commerce and the grocery vertical makes perfect sense during a time of lockdown orders.

Moreover, Shopify recently launched an app called Shop. Customers can use this app to track orders they’ve placed with Shopify’s retailers. Plus, users can discover new stores that are close by through the Shop app.

Again, this is what it means for a company to be future-proofed. Sure, Shopify could have continued focusing on apparel. But diversifying and trying new approaches is crucial to growing as a company, and that’s precisely what Shopify is doing.

The Final Word on SHOP Stock

The relative resilience of Shopify and of SHOP stock during the pandemic has been nothing short of amazing. Expect continued strength as the company takes multiple proactive measures to prepare for the future of online commerce.

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.


Article printed from InvestorPlace Media, https://investorplace.com/2020/06/shopify-shop-stock-ultimate-future-proofed-investment/.

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