Shopify (SHOP) shows nobody can compete with Amazon (AMZN). Few stocks have lost more value over the past year than Shopify.
Mr. Market paid $158.48 for Shopify Inc. (NYSE: SHOP) on 31 August 2021 and $30.11 for Shopify on 2 September 2022. Hence Shopify lost $128.37 in share value in a little over a year.
Similarly to Amazon (AMZN) Shopify runs a proprietary e-commerce platform that offers online stores and retail point-sale systems. The difference between Amazon and Shopify is that Shopify only offers software and digital solutions while Amazon operates extensive real world infrastructure.
Amazon’s Gamble Pay’s Off
For example, Amazon (AMZN) currently operates 110 fulfillment centers in the United States and 185 fulfillment centers globally. Furthermore, CNBC estimates Amazon operated 40,000 semi-trucks, 30,000 vans, and a fleet of over 70 planes to move merchandise in September 2021.
Conversely, TechCrunch estimates Amazon’s US delivery fleet had over 70,000 vehicles in January 2022. This fleet will grow, Amazon has a contract to buy 100,000 electric vans from Rivian (RIVN) through 2024.
Amazon’s enormous investment in infrastructure is paying off. Amazon reported quarterly revenues of $121.234 billion, a quarterly gross profit of $54.81 billion, and a quarterly operating income of $3.31.7 billion on 30 June 2022.
Amazon (AMZN) vs. Shopify (SHOP)
The Everything Store can generate enormous amounts of cash. It reported a quarterly ending cash flow of $36.599 billion on 31 March 2022. Conversely, Amazon reported a quarterly operating cash flow of $8.965 billion and a quarterly ending cash flow of $1.101 billion on 30 June 2022.
Consequently, Amazon (AMZN) had $60.932 billion in Cash and Short-Term Investments and $419.728 billion in Total Assets on 30 June 2022. Yet Mr. Market paid $127.51 for Amazon’s shares on 2 September 2022 because of its June stock split.
One reason I think Spotify’s share price is collapsing is that Amazon shares a far cheaper. Investors can get far more bang for their buck by buying AMZN.
Shopify offers Little Value
Financial data shows Shopify (SHOP) offers little value. For example, Shopify reported quarterly revenues of $1.295 billion, a quarterly gross profit of $656 million, and a quarterly operating loss of -$190.21 million on 30 June 2022.
Shopify’s e-commerce platform is losing money. Notably, Shopify reported a negative quarterly operating cash flow of -$123.45 million on 30 June 2022. However, Shopify can generate some cash. It reported quarterly ending cash flows of $899.24 million on 30 June 2022 and $2.452 billion on 31 March 2022.
Consequently, Shopfiy had $6.955 billion in cash and short-term investments and $10.748 billion in total assets on 30 June 2022. Conversely, Shopify had $1.193 billion in total debt on 30 June 2022.
Can Shopify Make Money?
Therefore, Shopify is a cash-rich company with some debt, even though it loses money. I think Shopify (NYSE: SHOP) could make money with its e-commerce platform someday.
Plus, Shopify is growing, Stockrow estimates its revenues grew by 15.73% in the quarter ending on 30 June 2022. Shopify’s revenue growth rate is falling. The revenues grew by 56.65% in the quarter ending on 30 June 2021 and 21.78% in the quarter ending on 31 March 2022.
In contrast, Amazon’s revenue grew by 7.21% in the quarter ending on 30 June 2022. Amazon’s revenues grew by 27.18% in the quarter ending on 30 June 2021.
Hence, I consider Amazon (AMZN) a better e-commerce investment than Shopify. Amazon is a better stock because it is cheaper than Shopify and offers far more value.