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Earnings season moves fast and furious, and Shopify’s momentum continues into 2021. Digital commerce tailwinds propelled Shopify (NYSE: SHOP) to strong financial results for the quarter ending March 31, 2021. The total revenue in Q1 fiscal 2021 was $988.6 million, a record of growth accelerating to 110% year over year — and for good reason.
More entrepreneurs around the world are choosing Shopify to launch and grow their businesses. The company’s focus is on making entrepreneurship easier and robust.Want to hop in on this bandwagon? Our beginners’ guide will help you learn how to buy stocks, including Shopify.
How to Buy Shopify (SHOP) Stock
Looking to bolster your portfolio with the massive opportunity presented by the growth of digital commerce? Here are the 4 simple steps you go through when buying SHOP stock.
- Pick a brokerage.
Whether you’re looking to take a quick profit from earnings release or want to hold for the long term, the first step to buying Shopify stock is opening an account with a broker — a financial services firm that buys and sells stocks on your behalf. Every broker located in the U.S. should let you buy and sell Shopify stock since SHOP is currently listed on the New York Stock Exchange.
Besides access to the listing exchange, other factors that will help narrow down your online broker options include:
The fees charged by the broker, perhaps in the form of commissions per trade or account maintenance fees charged annually or monthly
Access to additional markets, including foreign markets, cryptocurrency markets, futures and options
The availability of a demo or paper trading account to help you test your trading strategies
The types of educational resources and research offerings provided by the broker
The broker’s platform (is it user-friendly for beginners or does it offer advanced charting capabilities for more experienced investors?)
Ease of contacting customer support
Still can’t narrow down your options? Browse a few of our best brokers for trading stocks below.
- Decide how many shares you want.
Depending on your financial position, risk tolerance and overall investment goals, you can decide the number of shares you want even before committing your money. Start by looking at the current market price of SHOP and the amount of money you want to invest. Assume that if you buy SHOP today, you’ll pay near the market price.
Let’s say you’ve put aside $1,200 for investing in Shopify and the current stock price is $1,200, you’ll buy only 1 share of the stock. You may also own fractional shares of a stock if you intend to make small periodic purchases.
Remember, your portfolio may decrease in value overnight, so only invest money you can afford to lose. Luckily, SHOP isn’t synonymous with erratic price movements, so your portfolio value won’t sink to 0 overnight.
- Choose your order type.
The order type you choose will instruct the broker when to execute the trade, the price you want to buy and more. The right type of order will give you more control over the execution of trades. Here are some of the common order types you may place with your broker.
Market order: A market order lets you buy a security immediately during normal market hours. Market orders are executed in real-time and are therefore not accepted outside of the regular market hours.
Market order on open: This order lets you place orders outside of market hours for whole shares. This order won’t execute until the next trading day.
Limit order: A limit order lets you choose the price you want to buy a stock. A limit order only executes when the stock’s market price reaches the price you specified. Although you can control the price, you can’t control when the limit order executes. If the market price doesn’t reach your limit price, the order won’t fill.
Stop order: A stop order goes live at a predetermined stop price and fills at market price — it becomes a market order. The buy order won’t be triggered if the market price doesn’t reach the stop price.
Stop-limit order: A stop-limit order will go live at your predetermined stop price and will fill at your predetermined limit price or better.
Most brokers will let you switch between regular orders and advanced orders via the trading dashboard.
- Execute your trade.
Upon submitting your order to your broker, you can now relax. Your broker will follow your instructions to execute your order.
The amount of time it takes to fill your order will depend on the trading volumes, volatility and the type of order you placed. Most brokers will send you a notification when your order is filled. The number of shares you own will reflect in your account.
Best Online Brokers
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
- Active traders
- Intermediate traders
- Advanced traders
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Intuitive trading platform with technical and fundamental analysis tools
- Does not support trading in mutual funds, bonds or OTC stocks
Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.
Get started right away by downloading Moomoo to your phone, tablet or another mobile device.
- Cost-conscious traders
- Active and Advanced traders
- Over 8,000 different stocks that can be sold short
- Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
- No minimum deposit to open an account.
- No chat support
E*TRADE is an online discount trading house that offers brokerage and banking services to individuals and businesses. One of the first brokers to embrace online trading, E*TRADE not only survived both the dot-com bubble and Recession — it thrived. You can choose from two different platforms (one basic, one advanced). E*TRADE is a suitable broker for traders of most skill levels, whether you want to buy mutual funds and hold them for decades or dabble in options swing trading. E*TRADE offers a library of research and education materials to help you out.
- Active traders
- Derivatives traders
- Retirement savers
- Sophisticated trading platforms
- Wide range of tradable assets
- Exceptional customer service
- Limited currency trading
- Higher margin rates than competitors
- No paper trading on its standard platform
This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.
Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.
Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.
- Price earnings growth valuations
- Easily evaluate investment opportunities
CenterPoint Securities is ideal for active traders who demand access to advanced tools and services. While investors and casual traders are likely to be content with the basic offerings of traditional online brokerages, active traders will benefit from CenterPoint’s suite of advanced trading tools. If you value execution quality, access to short inventory, advanced trading platforms, and accessible customer service, CenterPoint is an excellent choice.
- Intermediate to Advanced traders
- High-volume traders
- Momentum traders
- Short sellers
- Unrivaled access to short inventory
- Flexible order routing for improved executions
- Discounts for active traders
- Advanced platform with fast executions
- Reliable customer service
- Not designed for beginner or low-volume traders
SHOP Stock History
Headquartered in Ottawa, Canada, Shopify is a leading global commerce company powering over 1.7 million businesses in more than 175 countries worldwide. The company’s initial public offering occurred on May 20, 2015, when the stock began trading on the New York and Toronto stock exchanges.
Shopify continues to offer a platform of services that are engineered for reliability while providing a better shopping experience for consumers globally. Merchants use Shopify’s software to run businesses across various sales channels, including mobile and web storefronts and social media storefronts. The company is trusted by brands like Heinz, Allbirds, Gymshark, Staples and more.
Shopify boasts strong financial results year over year. Total revenue in Q1 of fiscal 2021 was $988.6 million. Subscription solutions revenue was $320.7 million, a record growth of 71% year over year, mainly attributed to more merchants joining the platform. The company expects to continue growing revenue rapidly in 2021, but probably at a lower rate than in 2020.
SHOP Restrictions for Retail Investors
Shopify has never declared or paid a dividend and it doesn’t foresee paying any in the future. As a result, Shopify isn’t a good play for retail investors looking for a dividend-paying stock.
Pros to Buying Shopify Stock
- Partner ecosystem: Shopify is supported by a rich ecosystem of theme designers, app developers and other partners, such as service and digital professionals who have evolved around the Shopify platform. This partner ecosystem helps drive the growth of its merchant base, with approximately 42,000 of these partners referring merchants to Shopify over the last year.
- Large merchant base: As of December 31, 2020, Shopify had approximately 1,749,000 merchants from 175 countries globally using its platform. Its merchant base comprises a vast range of retail verticals and business sizes, and no single merchant represents more than 5% of Shopify’s total revenues in a single reporting period.
- Robust technology: The Shopify platform is a multi-tenant cloud-based system that’s engineered for reliability, performance and high scalability.
- Merchant acquisition: Shopify’s merchant acquisition strategy is largely focused on marketing that builds awareness of its offerings. Shopify actively grows its audience through online channels, including paid search, organic search and social media.
Cons to Buying Shopify Stock
- Government regulation: Shopify is subject to U.S. and Canadian laws and regulations that govern or restrict its business and activities in certain countries and with certain persons.
- No assurance to retain merchants: Shopify principally generates revenues through the sale of subscription plans that carry a 1-month, annual or multi-year term. Its merchants have no obligation to renew their subscription after their subscription term expires, so there’s no assurance that Shopify can consistently retain these merchants.
Join the E-Commerce Revolution
There’s no denying that the COVID-19 pandemic led to the accelerated adoption of e-commerce among both consumers and merchants. Even so, e-commerce was already growing before the pandemic struck, and there’s nothing stopping it anytime soon.
Modern commerce technology has seen accelerated merchant sales growth. With the focus to build a commerce operating system that will help shape the future of retail, Shopify is pegged to be the commerce juggernaut of the coming days. Shopify anticipates revenue in 2021 will continue to grow at a healthy rate, making it a good play for tech enthusiasts.
Frequently Asked Questions
Where can I find all of Shopify’s SEC filings?
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