Read JMP Securities Analyst's Take On Shopify

  • JMP Securities analyst Andrew Boone initiated coverage on Shopify Inc SHOP with a Market Perform rating.
  • Shopify is a leading commerce platform that entered a significant investment cycle as it offers fulfillment services to merchants, which he believed will limit margin expansion and free cash flow generation. 
  • He believed Shopify offered a best-in-class commerce service and expected it to take a share of merchants and overall commerce. 
  • With newer and differentiated tools like Shopify Fulfillment Network, Shopify Audiences, and Shopify Markets, he believes Shopify continues to make running a retail business easier while creating new revenue opportunities. 
  • While he viewed the Shopify Fulfillment Network as differentiated. However, he also expected it to be capital intensive and weigh margins and FCF.
  • Conversations with multiple Shopify merchants convinced him that they were unlikely to leave. Additionally, the Shopify App Store adds significant value to merchants. It fills any product holes, and it remains early for Shopify to cross-sell newer services into merchants as many Plus subscribers are unaware of recently released products. 
  • Price Action: SHOP shares traded higher by 4.23% at $32.74 on the last check Tuesday.

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