Boom in Online Shopping Fuels Rally in Shopify Stock
21 April 2020 - 3:35AM
Dow Jones News
By Alexander Osipovich
One of the stock market's biggest winners during the Covid-19
pandemic has been Shopify Inc., an e-commerce software company that
has benefited from surging traffic as vast swaths of the global
population have been forced to do more of their shopping
online.
Shopify's share price was up 6% to about $627 in midday trading
Monday, putting it on track for a fresh record close and its eighth
consecutive session of gains. The stock has climbed 81% since
hitting a recent low on April 2.
Those gains puts the Canada-based company ahead of larger
e-commerce players such as Amazon.com Inc., which is up 26% over
the same period, and eBay Inc., up 31%. The S&P 500 has risen
13% since April 2 as part of a broad rebound from the depths of the
coronavirus selloff.
Shopify sells businesses a variety of tools to make it easier to
build, run and market their online stores. The company says it
works with more than 1 million merchants world-wide, including
Nestlé SA and Staples Inc. It makes money through a mix of
recurring subscription fees and other fees, like payment-processing
fees, that grow with transaction volumes.
That has benefited Shopify as lockdown measures intended to
curtail the coronavirus pandemic have closed bricks-and-mortar
storefronts and upended traditional consumption patterns. Last
week, a Shopify executive said on Twitter that it was "now handling
Black Friday level traffic every day."
Still, the company's stock hasn't escaped the broader market's
volatility. Shopify shares sold off sharply at the beginning of
April after it suspended guidance for this year. The stock has also
attracted significant interest from short sellers in recent weeks,
according to data from S3 Partners, a sign that some investors are
betting that Shopify stock is overvalued.
Shopify went public in 2015, listing shares on both the Toronto
Stock Exchange and the New York Stock Exchange.
Write to Alexander Osipovich at
alexander.osipovich@dowjones.com
(END) Dow Jones Newswires
April 20, 2020 13:20 ET (17:20 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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