Skip to content

3 reasons why Shopify may be Canada’s first trillion-dollar company

3 reasons why Shopify may be Canada’s first trillion-dollar company

In the last few years, several companies south of the border have surpassed the trillion-dollar valuation in terms of market capitalization. Apple (NASDAQ: AAPL) was the first publicly listed company to be valued at $1 trillion and has since more than doubled in valuation.

Other tech giants such as Microsoft (NASDAQ: MSFT), Amazon (NASDAQ: AMZN), and Alphabet’s Google followed suit and have surpassed this landmark.

While there is no Canadian stock on this list, things might soon change by the end of this decade. Canada’s tech giant Shopify (NYSE: SHOP) is already the largest company on the TSX, trading at a market cap of $175 billion. Let’s see why it is poised to be the first TSX stock to reach $1 trillion in market value.

Revenue and earnings growth

In 2020, Shopify managed to increase its top-line by 86% year over year to $2.9 billion. The company operates via its Merchant Solutions and Subscription businesses.

While Merchant Solutions sales more than doubled by 117%, Subscription sales were also up by a solid 53% in the last year. This allowed the company to post a net income of $320 million in 2020, compared to a net loss of $125 million in 2019.

Wall Street expects revenue growth to decelerate in 2021, but it’s still forecast to rise by 39.6% to $4.09 billion this year and by another 31% to $5.36 billion in 2022. Analysts expect earnings to decline marginally by 2% in 2021. However, its forecast to rise by over 50% annually in the next four years.

Expanding addressable market

The COVID-19 pandemic acted as a massive tailwind for e-commerce companies including Shopify that accelerated the shift towards online shopping. 

In 2020, online sales accounted for 14% of total retail sales, up from just 11% in 2019 and 6% in 2014. According to a Statista report, this figure is expected to touch 19% by the end of 2024, giving Shopify enough room to grow revenue at a fast clip.

Massive merchant base

Shopify has close to 1.7 million merchants on its platform with over a million of them in the U.S. and this figure should move higher in the next few years. Shopify will be able to leverage its suite of expanding solutions to drive incremental sales from its new and existing user base lowering its user acquisition costs.

It is also the fastest-growing website store builder. Shopify has managed to increase its market share from 0.1% at the start of 2014 to almost 2% at the start of 2020 in this vertical.

We can see why Shopify may be Canada’s first trillion-dollar company given its multiple secular tailwinds, widening user base, and a rapidly expanding addressable market.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10. Other fees apply. For more information, visit etoro.com/trading/fees.

  • Copy top-performing traders in real time, automatically.

  • eToro USA is registered with FINRA for securities trading.

30+ million Users
Securities trading offered by eToro USA Securities, Inc. (“the BD”), member of FINRA and SIPC. Cryptocurrency offered by eToro USA LLC (“the MSB”) (NMLS: 1769299) and is not FDIC or SIPC insured. Investing involves risk, and content is provided for educational purposes only, does not imply a recommendation, and is not a guarantee of future performance. Finbold.com is not an affiliate and may be compensated if you access certain products or services offered by the MSB and/or the BD

Read Next:

Finance Digest

By subscribing you agree with Finbold T&C’s & Privacy Policy

Related posts

Sign Up

or

By submitting my information, I agree to the Privacy Policy and Terms of Service.

Already have an account? Sign In

Disclaimer: The information on this website is for general informational and educational purposes only and does not constitute financial, legal, tax, or investment advice. This site does not make any financial promotions, and all content is strictly informational. By using this site, you agree to our full disclaimer and terms of use. For more information, please read our complete Global Disclaimer.