With the increasing attention that e-commerce is generating, it’s easy to see why many retail investors want to add Shopify stock to their investment portfolio. But the big question is how do you go about this? And is investing in Shopify stock a good idea?
Read our detailed guide on Shopify stock to learn everything you need to know about the company. We will also mention the best broker for buying Shopify stocks.
Let’s kick off with an overview of the company.
A brief overview of Shopify
Shopify is a leading e-commerce platform that provides commerce services to small and medium-sized businesses. Since the company launched in 2004, it has continued to offer remarkable cloud-based solutions that allow customers to own and operate both online and brick-and-mortar stores.
Thanks to Shopify’s unique proposition, customers have the rare opportunity to take advantage of payment processing, analytics, inventory management, and other key functionalities provided by Shopify to aid the smooth running of their businesses.
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Trading with financial instruments carries high level of risks that is not suitable for all investors. Before making any investment decisions, you should seek advice from independent financial advisor to ensure you understand the risks involved.
Shopify kicked off operations in the early 2000s and is currently headquartered in Ottawa, Canada.
When did Shopify go public?
Shopify, a leading e-commerce software company priced its IPO at $17 per share. With this move, the company was valued at $1.27 billion.
During its initial public offering, Shopify sold over 7.7 million shares, raising a staggering $131 million in the process. Before selling for $17, Shopify had earlier proposed a range of $14 to $16 per share.
Founded in 2006, Shopify has become a household name in the e-commerce industry. The company provides advanced software tools for online retailers including payment processing, storefronts, and apps for checkouts. Besides previously raising over $122 million in private funding, Shopify has continued to unveil impeccable tools and software that are giving the likes of Bigcommerce and Magento a run for their money.
Shopify filed to go public in May 2015, following Etsy’s successful IPO. During its filing to go public, Shopify reportedly had over 162,000 merchant customers in 150 countries. In terms of revenue, the company reportedly made around $105 million at the end of that year.
The company has come a long way since going public. According to the latest stats, Shopify services over 1 million merchants. More so, goods sold on the platform totaled over 21 billion this year alone.
Thanks to Shopify’s subscription model, merchants are now paying over $60 million in Monthly subscriptions to use the platform. This has helped to significantly drive up the company’s revenue by well over 50% year over year. For instance, in 2019, the company made a whopping $1.07 billion in the first nine months of the year.
With such remarkable feet, it’s easy to see why Shopify’s shares have continued to appeal to many retail investors who want to get in on the action.
How has Shopify performed in 2022?
Despite severe headwinds from a terrible economy spurred by rising inflation, increasing interest rates, and the war in Ukraine, Shopify has managed to keep its head above the waters.
In the first quarter of 2022, Shopify saw its revenue grow to around $1.3 billion. This represented a year-over-year growth of about 21%. Although this performance trails the over 110% rise the company saw in the first quarter of 2021, it is exciting to know that Shopify hasn’t performed as poorly as other businesses in the U.S. retail industry.
Also, it would be recalled that Shopify’s performance in the first quarter of 2021 was largely due to the Covid-19 lockdown. But as the effects of Covid-19 fade away, it’s no surprise to see Shopify’s growth slow down a bit.
While the future of Shopify looks bright, we want to use this opportunity to highlight that the company has had its fair share of a challenging year.
Even though Shopify posted a net income of $1.3 billion, it’s important to note that the company also posted a net loss of $1.5 billion in Q1. Much of Shopify’s losses this year have been attributed to Shopify’s equity as well as losses incurred in other businesses.
While the company continues to explore and make strategic investments in other tech firms, it’s important to note that Shopify’s performance has been severely impacted by the tech stock sell-off.
Is now a good time to invest in Shopify stock?
Experts predict Shopify to make a grand comeback next year. According to recent reports from experts following the Shopify growth trend, there are bets that Shopify could see another resurgence in growth in the year to come.
Even though Shopify’s growth has been largely spurred by the pandemic environment, Shopify has been on the back foot for much of this year as Covid-19 fear fades away. That said, should the e-commerce industry continue to grow as experts predict, analysts predict that Shopify sales could increase by nearly 20% during early next year. A 20% growth in the short term would equate to a staggering $9.5 billion, a significant sum from which the company can grow off of.
Again, considering that the company currently trades at a market capitalization of nearly $37 billion, it implies a price-to-earnings ratio of around four. Should Shopify’s gross merchandise continue to skyrocket at the rate of 50%, which it has maintained in the past, it shows that Shopify’s valuation will rise to unprecedented levels in the years to come.
Looking at all of these stats and growth figures, one thing is certain, Shopify is destined to grow beyond its current level. While the increase in inflation, rising interest rates, and the continued sell-off in tech stocks have pressured Shopify’s stock value down, it is only a matter of time before the company rises from its current downward trend.
As of the time of writing today’s guide, Shopify stock was trading at $33.39, a good price for retail investors to jump in on the action and add some Shopify stocks to their investment portfolio.
How much would a $5000 investment in Shopify IPO return?
Let’s assume you were lucky enough to buy Shopify stock at $17 per share during its initial public offering and bought around 300 shares for a total of $5,000, you’d have made over 50% on the first day of trading, which wouldn’t have been a bad idea.
But selling for that price would have been a huge mistake, especially as Shopify stock rallied to around $370 per share a few years later. Selling your stocks at $169.09 per share would have yielded a return of $111,000.
While the value of Shopify stock has fallen significantly from its all-time high of $169.09 and now trading for $33.39, now is an opportunity to get Shopify shares for a steal. Experts predict that the coming years will be great for the company so you can expect Shopify’s stock value to gain momentum.
Step-by-step process of buying Shopify stock
After reading our overview of the company, we are sure you are ready to buy some of Shopify’s shares. And because we want to make the entire process easy for you, we have put together a step-by-step process you can follow. Read on for all the details.
Find a good online broker
Before you can buy Shopify shares online, you’ll need to choose a reliable broker offering the company’s stock. Thankfully, this isn’t so difficult as there are many reliable online brokers like Plus500, Fidelity, eToro, Admiral Markets, and AvaTrade, who let investors buy Shopify shares. But before choosing a broker, make sure you consider their trading fees, how accessible they are, their trading platform, and how easy it is to open an account. Also, you want to pay special attention to the security provided.
Open a brokerage account
Having decided on the brokerage to use, the next thing you need to do is sign up for an account. The process is pretty much like opening a regular bank account. And since the process is digital, you can complete the entire process on your phone. With brokers like eToro, it only takes a few minutes to register an account.
Fund your trading account
You’ll need your account funded before you can buy Shopify stocks. Thankfully, the process is super easy. And with most online brokers supporting multiple payment methods, you can fund your trading account using several methods including debit/credit card, wire transfer, PayPal, or other popular electronic wallet payment methods.
Buy Shopify stock
With your account now funded, it’s time to buy Shopify stocks. And the process is super easy. Once you login into your account, search for Shopify shares. Once you find the company’s stock ticker SHOP, choose it and enter the number of shares you’d like to buy. With that out of the way, you can click the buy button, this should trigger the purchase of Shopify stocks.
Tips: When placing your order, you’ll need to choose different order types depending on what works for you. If you select market order, then it means you have decided to buy Shopify stocks at the current market price. On the flip side, if you think the price might pull back a bit, you can choose the limit order, which lets you specify the exact price you’d want to buy the share.
Regularly review your Shopify position
We know it feels great to have bought some Shopify shares. But that isn’t all you need to do. After buying the company’s shares, you’ll need to monitor your investment. By monitoring, what we simply mean is following your investment strategy. Assuming you bought Shopify stocks and intend to hold your position for the long term, it’s important to participate in the annual meeting of the company and get a hold of all news and information about the company.
On the contrary, if you are in for the short term and plan to sell your shares as soon as it appreciates a bit, you might want to explore different position management tools. For instance, you can tweak the target price at which you’d like to sell your share. You can also use the stop-loss option. This option allows you to set a price you want to sell your shares to avoid further loss.
How to buy Shopify stock on eToro
Now that you know how to invest in Shopify stock, we want to use this opportunity to show you how you can buy Shopify shares on an exchange like eToro. And just so you know, the process is pretty straightforward and only takes a couple of minutes. Here, check out how anyone can buy Shopify stock on eToro.
Create an eToro account
If you don’t already have an account with eToro, you’d have to open one to be able to buy Shopify stock. As we earlier reiterated, the process is simple. If you already have an account with eToro, you can simply log in.
During the signup process, you’ll be required to provide basic information like name, email address, and phone number. Nonetheless, to fund your eToro trading account, you’ll need to provide additional info so the broker can verify your identity.
Complete your eToro profile
If you’re opening your account for the first time on eToro, you’d be required to complete your profile. For customers who have an existing account, you can skip this process. Completing your profile only takes a couple of minutes and is a requirement by most brokers as per AML and CTF regulations. With your profile now complete, you can proceed to other aspects.
Fund your trading account
After completing your eToro profile, you’ll need to fund your trading account to be able to buy some Shopify stocks. We love eToro because they have a low minimum deposit requirement. To start trading on the eToro platform, you’ll need to make a minimum deposit of $200 or it’s equivalent in other currencies.
And just to add, eToro supports up to 8 popular deposit methods including PayPal, wire transfer, UnionPay, credit or debit cards, Neteller, Skrill, and WebMoney. So, funding your account is super easy.
Tip: If you’re not fully convinced or you don’t feel ready to invest real money, you can test the waters with eToro’s virtual portfolio feature. This option lets you trade your favorite stocks without putting in real money. And as you gain experience and feel more comfortable, you can switch to a real portfolio.
Buy SHOP or Shopify stock
With your eToro account now funded, you can proceed to buy Shopify stocks. While eToro lets you buy Shopify shares seamlessly, you can also decide to short it. Keep in mind that the direction you decide to take is based on current market sentiments or direction. Here is how you can buy Shopify stock on eToro.
Navigate to eToro’s unique search bar which sits at the top of the screen. Enter the ticker name associated with Shopify stocks: SHOP. Hit the trade now button to place your order. A new window should pop up, allowing you to make changes to different parameters. It’s that easy.
