Back in 2004, Shopify was started. In 2015, the company went public, and each share was offered for $17. At $28, trading began, which showed that traders and investors were optimistic about the growth of the company.
As of July 2019, the going rate for a share of Shopify is $315. In just four years, the price of each Shopify stock has gone up by more than 1,700%.
How come?
Here, we’ll look at what makes Shopify a good investment, especially the five reasons why its stock has gone up this year compared to last year. As of the end of trading on December 31, 2018, the price of Shopify’s stock was around $138.
Ready to compete with Amazon
Shopify announced in July 2019 that it will build fulfillment centers in the United States. A fulfilment center is a warehouse that stores, labels, and ships items that are sold by many different sellers.
Amazon’s Fulfillment by Amazon, or FBA, program is based on this model. This is a good way to run a business, since sellers don’t have to worry about shipping anymore.
This also makes it possible for sellers to offer more affordable shipping rates, since Shopify will likely work with big shipping companies like UPS, DHL, and FedEx to get lower shipping rates.
This means that Shopify sellers can expect to make more sales and ship faster. And if a Shopify seller’s sales go through the roof, Shopify takes an average of 2.9% + $0.30 from each transaction.
The money made from the monthly subscription is not part of the money made from transaction fees. Since Shopify is not an online market place but rather a platform for online stores, buyers do not have to choose from just one site. Also, sellers won’t try to undercut each other with lower prices like they do on Amazon.
Sales went up by 50%
It won’t be easy to do this. Most of the time, sales at big companies are slow, and sales revenue only goes up by 10% to 15% from year to year.
But Shopify is not a typical business. The first quarter of 2019 brought in 50% more money than the same time last year. At that time, $320,500,000 was made in sales. Even though this increase in revenue isn’t as big as the 54% increase between the third and fourth quarters of 2018, a 4% drop isn’t that bad.
Also, the $320 million in sales is more than what stock analysts thought would happen. They thought Shopify wouldn’t make more than $310 million by the end of the first quarter of 2019. But Shopify did better than what was expected.
This is because Shopify’s subscriptions sell so well and bring in a lot of money. In the first quarter, the money made from subscriptions was $140.5 million.
Compared to the last quarter of 2018, sales from subscriptions went up by 40%.
This income comes from selling themes, monthly subscriptions, apps, and registering domain names.
Upgrades for Shopify Plus
During the Shopify Unite 2019 event, Shopify talked about some changes that will be made to its Shopify Plus platform.
After the update, sellers can now sell to people all over the world and charge in their own currencies. This is a huge plus for online sellers who want to sell more in their own country. Before, Shopify sellers could only use a small number of currencies.
There are apps that show prices in the local currency of the customer, but the seller will still get paid in dollars.
Since sellers can now charge in different currencies, it will be easier for them to keep track of their sales and reach more clients around the world.
Also, Shopify is adding more languages to its platform, which gives sellers more chances to sell their goods in new markets. Danish, Dutch, Swedish, Malay, Traditional Chinese, and other languages will be added to the list.
The translations applications programming interface is the most important part of this upgrade. This is a program that will translate each store into the language chosen by the user or seller. It will be the same for all Shopify-built online stores.
Easier App Development
Some people might think this is too technical, but this is a big step forward for Shopify this year. In general, Shopify will add new features to its GraphQL.
GraphQL is a program that speeds up the way computers talk to each other so that users can have a better time online. This is important because it affects both the seller’s and the user’s load times. When computers can talk to each other faster, they can respond faster and run a business more quickly.
Also, this update will make it easier for app developers to make apps that meet the needs of Shopify sellers. Shopify made a change to its internal system so that the platform can work with ten new open-source code libraries.
With these changes, sellers can expect to be able to use more apps to get buyers to buy something. And if more people buy things, Shopify will make more money.
Changes to Stores, Both Simple and Complex
Shopify is making changes to the way its stores work this year that will make sellers happy. Because of the changes, online sellers will be able to change their stores without having to write a single line of code.
These changes include:
- Before the change, sellers could only change parts of the home page. Now, they can change parts of every page. Now, though, they can do it on each page. So, if a seller wants to put an ad on each page, he can now do that.
- Master pages let merchants choose which items go on which page and tell the system. These changes can be made to all or just a few of the store’s pages.
- Content portability The store’s content won’t be in the themes anymore. Before, the problem with Shopify was that all of your store’s items had to fit with the theme. If you change the theme, you have to re-upload all of the products and pages. Now, you can change the theme, and all the content will still be there.
This means that Shopify has more to offer and can get more new merchants to sign up for its service. It can also sell more store themes now that changing them is easier.
Summary
Shopify’s stock is going up because the company’s leaders are doing more and more to make their products and services better. Trying to compete with Amazon is a huge task, but this will change the way online shopping works.
