If you’ve shopped online more often since the pandemic began, you’re not alone. You and countless others have helped e-commerce platforms like Shopify thrive. With revenues booming, Shopify’s stock had a great 2021 despite some hiccups related to the pandemic.
Shopify’s business model is to provide an online platform for all types of businesses to reach more customers. While the pandemic has kept more Americans at home and in front of their computers, making online shopping more likely, analysts wonder if the Shopify business model can thrive after the pandemic ends.
To see how much Shopify is worth, take a look at this snapshot of the company’s current state, along with a discussion of the company’s history, value and future outlook.
|Shopify: Company Snapshot|
|Founders||Tobias, Lutke, Scott Lake, Daniel Weinand|
How Much Is Shopify Worth Now?
Many companies and individuals have suffered since the pandemic began in the U.S. in early 2020, but Shopify is not among them. In fact, the stay-at-home culture that developed has actually worked to Shopify’s advantage.
The stock had been on a slow and steady rise before spiking during the 2019 holiday season. After a brief dip in March 2020, when the U.S. economy essentially shut down amid uncertainty over how the pandemic would affect Americans, the stock rose sharply through July before losing ground.
Shopify’s share price reached a high of $1,762.92 on Nov. 19, 2021. It’s currently trading about 63% lower, at $656.88, bringing the company’s market cap to $82.74 billion. Market pundits use this figure to express how much a company is worth.
What Is Market Capitalization?
Market capitalization is simply the number of outstanding stock shares a company has issued times its current market price. So, for example, if a company has issued one million shares of stock and its share price is $50, the company has a market capitalization of $50 million. Shopify currently has about 126 million shares outstanding, so 126 million times the closing share price of $656.88 on Feb. 18 equals $82.74 billion — down from $191.84 billion in early November 2021.
Market cap does have its drawbacks as an evaluation method, however. For starters, market cap changes frequently, and it’s closely tied to the company’s current share price. It doesn’t take into account any of the direct financial metrics of the company, such as earnings per share, growth rate or book value.
By way of comparison, the price/earnings ratio, which is another popular valuation method, is also closely tied to a company’s market share price. The P/E ratio also relies heavily on a company’s earnings, which some investors feel is a more important determinant of a company’s valuation. Shopify’s P/E ratio is 28.84, down from 57.01 in early November 2021.
Shopify Market Cap
Shopify’s market cap varies from moment to moment based primarily on its share price. Although an increase in outstanding shares could also increase its market cap, that type of change occurs far less frequently than a change in share price, which can occur in less than one second. Here is Shopify’s share price range over the past 52 weeks:
Share price: $640.86-$1,762.92
As a result, Shopify’s market cap over that same period has also been extremely variable. Shopify’s current market cap is $82.74 billion.
Calculating Shopify’s Net Worth
In its most basic form, net worth is simply a company’s assets minus its liabilities. By this metric, Shopify’s net worth as of the end of the 2021 fiscal year was $11.13 billion.
|What Is Shopify Worth Now?|
|Share Price, 52-week range||$640.86-$1,762.92|
|Fiscal Year 2021 Revenue||$4.61 billion|
|Fiscal Year 2021 Profit||$2.911 million|
|GOBankingRates’ Evaluation of Shopify Net Worth||$17,835,476,667|
Of course, methods of determining the value of a company are wide and varied, each with its own merits and blind spots.
GOBankingRates uses company data to calculate net worth in a slightly different manner. The GOBankingRates company net worth is a calculation of a company’s worth based solely on concrete, measurable figures like assets and revenue. It’s a more conservative valuation than most, taking into account only full-year profits and revenue from the last three years and the company’s assets and debts.
By this GOBankingRates metric, Shopify’s net worth is currently $17,835,476,667, up from $7,547,728,500 following the end of the company’s 2020 fiscal year.
Key Product Lines Contributing To Revenue
Shopify’s core business is offering an e-commerce platform to businesses of all sizes. Whether you are an online seller, a brick-and-mortar business, a startup or a long-established business, you can use Shopify as an online outlet for your products.
Shopify’s business generates revenue from two primary sources: subscription solutions and merchant solutions. As the name implies, the Subscription Solutions division generates revenue from recurring subscriptions to the Shopify platform, in addition to the sale of custom themes, apps and domain name registrations.
The Merchant Solutions division generates revenue from subscriptions to various business services, including accepting payments and shipping and fulfillment, among others.
Here are some of the earnings highlights from Shopify’s fourth quarter for fiscal year 2021, ending Dec. 31:
- Total revenue for the quarter jumped 41%, to $1.384 billion.
- Adjusted gross profit grew 37%, to $700.64 million.
- Merchant Solutions revenue growth increased 47%, while Subscription Solutions revenue grew 26%.
For the company’s most recent year end, Dec. 31, 2021, the company reported annual revenue of $4.61 billion, a 57% increase from 2020.
Founder: Tobias Lutke
Although Tobias Lutke shares co-founder status with Scott Lake and Daniel Weinand, Lutke currently helms the company as its CEO.
Lutke was born in Germany, where he learned coding by the age of 12 and entered a computer programming apprenticeship at age 16.
The Shopify founder’s net worth is $5.8 billion, according to Forbes. That’s down from $13.2 billion in early November 2021. Lutke owns almost 7% of Shopify, so his wealth varies with the company’s share prices.
Current Top Shareholders
The top 10 shareholders of Shopify stock are all asset managers/mutual fund companies. As a group, institutional and mutual fund shareholders own 71.70% of all Shopify shares. Here’s what the top shareholders list looks like:
Shopify’s Top 10 Shareholders
- Morgan Stanley Investment Management, 5.16% of shares
- Baillie Gifford & Co., 4.78% of shares
- Jennison Associates LLC, 4.12% of shares
- Capital World Investors, 3.94% of shares
- FMR LLC, 3.83% of shares
- The Vanguard Group Inc., 3.10% of shares
- T. Rowe Price Associates Inc., 2.92% of shares
- Capital Research Global Investors, 1.85% of shares
- WCM Investment Management LLC, 1.80% of shares
- Sands Capital Management, LLC, 1.23% of shares
Any of these shareholder percentages can change at any time, even dropping down all the way to 0%. Shopify has been a hot stock, so these percentages may hold, but if the company’s fortunes turn sour, institutions may bail out at any time.
How Does the Future Look for Shopify?
Shopify had a great run in 2020 and continued to grow in 2021, finishing the year with a 57% increase in revenue compared to 2020 and earnings of $22.90 per diluted share compared to $2.59 per diluted share in 2020 — a phenomenal increase by any standards. However, despite the strong results and significant expansion and upgrades over the course of the year, Shopify’s stock dipped after the earnings release. In its guidance for 2022, Shopify acknowledged that headwinds such as the pandemic lockdowns and economic stimulus would be absent this year. The comments also acknowledged caution among consumers due to inflation. The company said it expects lower revenue growth in the first quarter of 2022 and the highest growth for the year to occur in the fourth quarter.
Will It Be a Buy?
The consensus rating from 29 analysts covering Shopify stock is “buy,” and their composite price target is $1,770.36 — a significant downgrade from $2,073.23 in early November but still well above the stock’s current price. Shopify’s best days may still be ahead of it.
Shopify has invested heavily in making it easier for entrepreneurs to join the platform and expand their markets outside of North America. It believes expanded opportunities for entrepreneurship and digital commerce will offset challenges posed by changes in consumer shopping habits and spending. If it’s right, it’s investments — and investors’ — could pay off over time.
Is Shopify Worth the Money?
Despite the price dip and cautious outlook for 2022, analysts still have a “buy” rating on the stock, and momentum may keep pushing this stock higher. Analysts on average see the stock bouncing back in a big way from here, so there may still be plenty of room left to run.
Share price is just one of the variables you should consider when investing in a specific stock. Your financial situation plays a large part in determining whether or not you should invest in stocks at all — let alone invest in a specific stock like Shopify.
Working with a fiduciary financial advisor is a good way to delineate your investment objectives, risk tolerance and personal financial situation to determine if investing in stocks is a good match for you.
Daria Uhlig contributed to the reporting for this article.
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Data is accurate as of Feb. 21, 2022, and subject to change.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.
- U.S. Securities and Exchange Commission. "Form F-1."
- Yahoo Finance. "Shopify Inc. (SHOP) Stock Price."
- MarketWatch. "SHOP | Shopify Inc. Cl A Quarterly Balance Sheet."
- Forbes. 2020. "Tobi Lutke."
- Shopify. 2020. "What Is Shopify? How to Start Selling on Shopify."
- CNN Money. "SHOP - Shopify Inc Shareholders."
- Nasdaq. "(SHOP) Analyst Research."