of stocks Shopify (NYSE: SHOP)The most popular e-commerce software platform in the United States is up more than 2,000% since going public in 2015. S&P 500By comparison, it only increased 195% over the same period.
The best news is that Shopify stock could rise. another It's expected to rise 2,000% over the next few years, so if you're looking for a stock that's poised to grow substantially, this could be the stock for you.
Shopify has a huge lead over its competitors, and the difference is clear.
When it comes to Shopify, there are two key factors to note: The first is the competitive landscape, where Shopify is the undisputed champion.
When most people think of e-commerce, they think of companies like these: Amazonis a business that sells goods and services online. But there is another kind of e-commerce business: others You need to set up your own digital storefront. Shopify, for example, doesn't operate its own stores. Instead, millions of merchants use Shopify's platform to run their stores. Small home-based businesses use Shopify-powered stores, but so do big brands. Nike, Allbirdsand Red Bull.
Let's say you want to start selling online. You could list your products on Amazon, but you'd have to pay the company anywhere between 8% and 45% of your sales. Shopify, on the other hand, only takes a small percentage of your sales as commission, and in return gives you everything you need to build a successful e-commerce business. This includes web design templates, marketing and analytics tools, an inventory management dashboard, payment processing, and more. While it's not as immediately accessible as a platform like Amazon, it has more tools, customization options, and features, and you get to keep a much larger percentage of your sales.
According to data compiled by Statista, Shopify holds 28% of the U.S. e-commerce platform market share, while WooCommerce has 18% market share. Wix Third place comes in at 17%. Meanwhile, ecommerce spending overall is on the rise. In 2019, U.S. ecommerce spending was $540 million. Last year it surpassed $1 billion. By 2029, it's expected to approach $1.9 billion. That means ecommerce platforms like Shopify are swimming in an increasingly large pool of potential customers. As you can see, Shopify is likely to not only maintain its current industry-leading position, but expand it in the coming years.
Artificial intelligence could drive this stock soaring
The second reason to like Shopify stock right now is that the company is well-positioned to benefit from the rise of artificial intelligence (AI). E-commerce platforms like Shopify, WooCommerce, and Wix all compete somewhat on price. But they compete most on functionality and user experience. Whoever makes their platform more powerful and easier to use will win.
Shopify, with the largest market share, has an early lead. AI should further accelerate this lead in the coming years. That's because Shopify has the resources to attract the most AI developers to its platform. Currently, any developer can add features to Shopify's platform and earn revenue when users decide to incorporate new tools and services. Developers know that Shopify offers the largest potential user base to monetize their creations. The company already offers a multitude of AI apps and features that users can implement with a few clicks, from chatbots to automated content creation. As AI becomes more widespread, Shopify is expected to benefit and gain more market share in an already large and growing market.
How big will Shopify get? With its recent stock price decline, the company is valued at just $75 billion. By comparison, Amazon is worth about $1.9 trillion. If Shopify were to reach Amazon's scale, it would be up more than 2,000%. To be clear, Amazon is a much more diverse and much larger business than Shopify. It will take Shopify years, even decades, to reach a market cap of $1 trillion, much less a market cap of $2 trillion. But it's exactly these kinds of businesses that can continue to grow long enough to reach this massive scale.
The global e-commerce market is obviously big enough to accommodate a Shopify 10 or 20 times larger than it is today. Keep in mind that this underlying market is still growing at about 10% per year. A lot of that growth will go to large integrated e-commerce sites like Amazon. But independent stores like those that use Shopify will also capture an increasing amount of this new market growth. After a 25% drop in stock prices over the past 90 days (due to short-term concerns about quarterly guidance), now is a great time to back up trucks for a quality business with a great path for long-term growth.
Should I invest $1,000 in Shopify right now?
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, serves on The Motley Fool's board of directors. Ryan Vanzo is an investor in Shopify. The Motley Fool has invested in and recommends Amazon, Nike, Shopify, and Wix.com. The Motley Fool recommends long calls on Nike's January 2025 $47.50 calls. The Motley Fool has a disclosure policy.
The post 2 Reasons You Should Buy Shopify Stock Like There's No Tomorrow was originally published by The Motley Fool.
