Shopify Inc (NYSE:SHOP), The Darling Of Social E-Commerce


Shopify Inc (NYSE:SHOP) is getting frequent mentions these days in the same breath with social commerce. Facebook Inc (NASDAQ:FB), Twitter Inc (NYSE:TWTR) and Amazon.com, Inc. (NASDAQ:AMZN) have all sought to deal with Shopify in their e-commerce implementations. What is in Shopify, and can you love it?

Shopify Inc (NYSE:SHOP) prides itself as a cloud-based e-commerce platform that offers a range of solutions for merchants. The company boasts over 175,000 small business vendors using its platform. In terms of sales, Shopify’s revenue in the latest 12 months comes to $144.8 million. However, the company is still a loss maker, losing $16.9 million in the latest 12 months.

However, a $16.9 million loss has not been enough to dampen investor spirit in the stock. Shopify’s stock has registered nothing short of a meteoric rise in the recent times, which begs the question of what lies in the future for the company.

The name behind social e-commerce

Shopify Inc (NYSE:SHOP) is working with multiple social networking companies to help them implement e-commerce on their platforms. Given that e-commerce is promising to be an important source of revenue at Facebook and Twitter, for example, Shopify is positioning itself to grow with these companies in their new endeavors.

Facebook, with about 1.5 billion monthly active subscribers, tapped Shopify to support buying and selling on its revamped small business pages. Merchants can post items in the Shop section of the small business page and shoppers can complete their purchase directly on the page or be taken over to the merchant’s native website for deeper engagement.

On Twitter, Shopify is powering the Buy button on the microblogging site. Twitter recently made its Buy button available to more U.S. merchants with plans to roll it out globally. Shopify has also collaborated with Pinterest to enable payable Pins. Amazon also recently moved some of its vendors to Shopify’s platform.

The business

Shopify Inc (NYSE:SHOP) is shaping up to be an important part of social network e-commerce. Currently, Shopify operates in two business segments, namely Merchant Payment (MP) and Software as a Service (SaaS). Of the two businesses, SaaS is growing faster with the segment accounting for 60% of annual revenue. However, MP is not only a slow-growth business, but margins there are comparatively lower, yet it is MP that seems to be getting deeper with social e-commerce implementers.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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