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Shopify Stock: A Bargain Basement Valuation?

September 14. 2022. 6 mins read

Earnings six figures while working four hours a week from anywhere is a common promise made to naïve dreamers who think such a thing is purchasable. Just plunk down $299.99 for the PDF guide and avail yourself of financial independence. That appeal was often made by those who peddled dropshipping as the quickest way to financial freedom some years back. The more people who climbed aboard the idea, the more firms like Shopify (SHOP) benefited. If you’re looking at starting an online business selling physical products, Shopify is the largest ecommerce platform in the United States with a market share upwards of 30%.

Upselling Subscribers

Most of our merchants are on subscription plans that cost less than $50 per month, which is in line with our focus of providing cost effective solutions for early stage businesses.

Credit: Shopify

If we assume “most” is 50% or higher, then most of Shopify’s customers pay them no more than $600 a year to access a platform which is generating gross margins exceeding 90%. From there, Shopify “harvests” these leads and sells them merchant solutions. As you would expect, Shopify benefited from the ecommerce boom that accompanied The Rona, and investors are wondering what growth can be realized in the “new normal.”

Going forward, we expect more normalized growth in gross merchandise value against a more measured macro environment relative to 2021 as a result of post-pandemic consum

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