Skeptics will wonder if Shopify (SHOP) could collapse because the company loses money.
For example, Shopify (NSYE: SHOP) reports growing quarterly operating losses. The quarterly operating loss grew from -$97.98 million on 31 March 2022 to -$190.21 million on 30 June 2022 to -$345.37 million on 30 September 2022. The last quarterly operating income Shopify reported was a paltry $14.40 million on 31 December 2021.
Moreover, Shopify’s revenues are not that large. For example, quarterly revenues of $1.366 billion on 30 September 2022. The quarterly revenues grew from $1.234 billion on 30 September 2021. This is tiny for a company that claims to generate 10% of US ecommerce.
Plus, Shopify’s growth is slowing. Stockrow estimates Shopify’s revenues grew by 46.43% in 30 September 2021. However, the revenue growth rate fell to 21.58% on 30 September 2022.
What Value does Shopify (SHOP) offer?
BuiltWith estimates 4.192 million websites worldwide were using Shopify (SHOP) solutions on 22 December 2022.
Plus, BuiltWith estimates there were 2.717 million live Shopify websites in the United States on 22 December 2022. The USA is Shopify’s largest market. In contrast, the second largest Shopify market was the United Kingdom with 176,262 websites on 22 December 2022. Another 1.986 million websites redirected users to Shopify sites on 22 December 2022, BuiltWith estimates.
However, only 2.26% of the top one million websites were built with Shopify on 22 December 2022, BuiltWith estimates. Plus, they built 2.77% of the top 100,000 websites with Shopfiy on 22 December 2022. Only 4.08% of the top 10,000 websites were using Shopify on 22 December 2022.
Hence, Shopify has an enormous online footprint. Shopify itself claims its websites reach customers in over 170 countries and generate over $444 billion in economic activity. Shopify claims to serve merchants in over 175 countries.
Shopify sites accounted for 20% of the top one million e-commerce sites or 200,000 of the top e-commerce sites, in 2022, Kinsta estimates. The largest category of Shopify sites in April 2021 was clothing with 75,496 sites, Statista estimates. The second largest category was home and garden, with 33,932 sites in April 2021.
What Value does Shopify (SHOP) offer?
BuiltWith estimates 4.192 million websites worldwide were using Shopify (SHOP) solutions on 22 December 2022.
Plus, BuiltWith estimates there were 2.717 million live Shopify websites in the United States on 22 December 2022. The USA is Shopify’s largest market. In contrast, the second largest Shopify market was the United Kingdom with 176,262 websites on 22 December 2022. Another 1.986 million websites redirected users to Shopify sites on 22 December 2022, BuiltWith estimates.
However, only 2.26% of the top one million websites were built with Shopify on 22 December 2022, BuiltWith estimates. Plus, they built 2.77% of the top 100,000 websites with Shopfiy on 22 December 2022. Only 4.08% of the top 10,000 websites were using Shopify on 22 December 2022.
Hence, Shopify has an enormous online footprint. Shopify itself claims its websites reach customers in over 170 countries and generate over $444 billion in economic activity. Shopify claims to serve merchants in over 175 countries.
Shopify sites accounted for 20% of the top one million e-commerce sites or 200,000 of the top e-commerce sites, in 2022, Kinsta estimates. The largest category of Shopify sites in April 2021 was clothing with 75,496 sites, Statista estimates. The second largest category was home and garden, with 33,932 sites in April 2021.
What is Shopify (SHOP)?
Shopify (SHOP) is a software-as-a-service (SaaS) company that sells e-commerce solutions. Shopify claimed to offer over 8,000 apps in its app store in December 2022.
Additionally, Shopify offered merchants 70 themes and access to over 780 “experts” through its network. Major Brands that use Shopify include Netflix (NFLX), Heinz, Tupperware, Allbirds, and Gymsshark. Shopify claims merchants generated $12.5 billion in revenue through its ecosystem in 2020.
SaaS solutions Shopify offers include apps, themes, storefronts, APIs, and references. For instance, Shopify offers merchants, developers, and websites access to solutions through application programming interfaces (APIs). For example, GraphQL and REST APIs integrate websites with Shopify’s admin, online store, checkout, and other resources.
Developers can embed Shopify in Apps with App Bridge and access solutions with a high ready-to-build Polaris component library. Liquid lets Shopify users build templates and Dawn offers access to reference themes.
The Shopify API and software development kits (SDKs) can connect to websites, mobile phones, gaming experiences. A Marketplace Kit can connect to platforms and millions of Shopify merchants. Developers can launch apps and themes to millions of merchants through Shopify’s app store.
How Much Money is Shopify (SHOP) losing?
Shopify (SHOP) is making some money from its SaaS products. For example, Shopify reported a quarterly gross profit of $662.33 million on 30 September 2022.
The quarterly gross profit grew from $608.91 million on 30 September 2021, but fell from $692.66 million on 31 December 2021. Hence, Shopify’s profits are growing.
Shopify is burning cash instead of generating money. For example, it reported a “quarterly operating cash flow” of -$214.11 million on 30 September 2022. The quarterly operating cash flow fell from $260.46 million on 31 December 2021 and $41.87 million on 30 September 2020.
Moreover, Shopify reported a quarterly ending “cash flow” of -$1.973 billion on 30 September 2022. The quarterly ending cash flow fell from $2.452 billion on 31 March 2022, and $899.24 million on 30 June 2022. However, the quarterly ending cash flow fell from -$175.06 million on 30 September 2021.
Importantly, Shopify is investing in its business. It reported a quarterly investing cash flow of $1.033 billion on 30 June 2022. However, the quarterly investing cash flow fell to -$1.749 billion on 30 September 2022.
How Much Cash and Debt does Shopify (SHOP) have?
Shopify (NYSE: SHOP) has some cash. It had a $4.941 billion on 30 September 2022. The cash and short-term investments fell from $7.519 billion on 30 September 2021.
In contrast, Shopify’s total debt grew from $1.01 billion on 30 September 2021 to $1.299 billion on 30 September 2022. Hence, Shopify has less cash and more debt.
Shopify is borrowing a little money. It reported a quarterly financing cash flow of $3.42 million on 30 September 2022. The quarterly financing cash flow fell from $29.15 million on 30 September 2021.
I consider Shopify cash rich for a modest SaaS company, which is what Shopify truly is. However, the financial show Shopify is not retaining cash.
Is Shopify (SHOP) a value investment?
Many people will consider Shopify (SHOP) a value investment because Mr. Market paid $32.64 for it on 28 December 2022. The share price fell from $138.56 on 22 December 2021.
Hence, I consider Shopify a reasonably priced stock because it had $11.203 billion in total assets on 30 September 2022. However, the total assets fell from $13.537 billion on 30 September 2021. Shopify is losing value.
Yet Shopify still makes popular products that serve millions of customers. I consider Shopify a risky speculative investment because it is losing money and value.
My advice is for investors to avoid Shopify until starts making money. Until then, Shopify is at risk for collapse because it loses money.
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