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Will Shopify (SHOP) Be The Next Amazon?

RiverPark Advisors an independently-owned investment firm, recently published its first-quarter RiverPark Long/Short Opportunity Fund commentary. During the first quarter of 2020, the RiverPark Long/Short Opportunity Fund returned 9.48% (institutional shares), compared to the total return of -19.60% by the S&P 500 Index. You should check out RiverPark’s top 5 stock picks which helped them beat the market by nearly 30 percentage points. There weren’t a lot of funds who could deliver these kinds of returns without shorting the market or using aggressive put options.

In the said letter, RiverPark Advisors highlighted a few stocks and Shopify Inc. (NYSE:SHOP) is one of them. Shopify is an e-commerce company. Year-to-date, SHOP stock gained 81.8% and on May 7th it had a closing price of $722.76. Its market cap is of $84.7 billion. Here is what RiverPark Advisors said:

“Shopify provides software tools enabling retail merchants of any size to display, manage and sell their products across a dozen different sales channels. SHOP’s software provides an integrated back end that enables merchants to manage inventory, process orders and payments, fulfill and ship orders, build customer relationships, source products, leverage analytics and reporting, and access financing. Last year $61 billion (6%) of US retail e-commerce sales flowed through SHOP, second only to Amazon. Revenue grew 47% last year to $1.6 billion, and SHOP has strong gross margins at 56%. We believe that between the growth of e-commerce generally and the development of new products from its $2.5 billion of cash, the company can grow revenue at greater than 30% per year for years to come, which will help drive operating margins to more than 20%.”

As you can see RiverPark believes Shopify has strong growth potential. In 2019, Shopify reported $61 billion of domestic retail e-commerce sales. Shopify was second only to Amazon Com Inc (NASDAQ:AMZN). In Q4 2019, the number of bullish hedge fund positions on SHOP stock decreased by about 19% from the previous quarter (see the chart here).

Disclosure: None. This article is originally published at Insider Monkey.

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