SHOP - Shopify Direct Sales Should Win As Amazon Shifts Toward 'Pay To Play' Model
2024-04-29 05:53:57 ET
Summary
- As Amazon transitions toward a "Pay to Play" vendor ad model, its value to vendors and customers is increasingly compromised, expanding the potential for direct sales.
- Shopify's highly integrated platform with social media reach makes it far more valuable for vendors and potentially more valuable for customers than Amazon.
- If Shopify cut its R&D and marketing while continuing its sales growth, the company could earn an EPS of ~$5 by 2030, making it fairly valued today.
- At its current valuation, Shopify's high growth rate must not falter, even as it transitions toward a higher profit model.
- Shopify's external risks appear low, as its platform has superior tools to its competitors at a reasonable price for most businesses.
A theme in my recent articles is internet-centric firms catering to small businesses and self-employed people. Etsy ( ETSY ), Fiverr ( FVRR ), and Intuit ( INTU ) are notable examples. To me, this market segment is particularly interesting because it is subject to a range of trends that are causing stock volatility. For one, we're seeing generally solid growth among small businesses that operate on an online platform. However, since 2020, these companies have seen wild trends, with most skyrocketing in 2021 as growth rates rose during lockdowns and then plummeted in 2022 as the bubble popped....
Shopify Direct Sales Should Win As Amazon Shifts Toward 'Pay To Play' Model