Q: Hi 5i Team - A guest on Market Call today stated that Shopify is trading at 100 times next year's earnings with anticipated revenue growth of 22%, Could you comment on the accuracy of these figures and your view on whether its shares may be over-valued at this time. Any other comments on its stock price and fundamentals would be appreciated. Thanks.
5i Research Answer:
Numbers are close: P/E is 75X and revenue expected growth 23%. We cannot say the stock is cheap, certainly. However, looking at its historical valuation multiples, it is definitely on the lower end of its history. It has not always been profitable, but at times its P/E ratio has been multiples higher than its current range. It has $5B cash and essentially a North American duopoly in its business with AMZN. International growth potential is also still very high. Estimates have been rising. Despite its valuation, we would still consider it a very solid stock for growth investors.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in AMZN.