“We have a greater appreciation for SHOP’s ability to deliver robust growth for the next several years and reach about $10 billion of revenue in 2025, powered by a structural pull-forward in e-commerce activity and better monetization of [gross merchandise value],” he wrote in a commentary.
Shopify shares recently traded at $977.90, up 5%. They have well more than doubled year to date as Internet shopping has exploded during the coronavirus pandemic.
“We expect SHOP to sustain strong GMV growth in the fourth quarter, powered by holiday shopping,” Samana said. “With [the] shares about 20% off 2020 highs, we see now as an opportunistic entry point.”
The prospects for Shopify in the long term are bright, the analyst says.
“While the pandemic is temporary, it has exacerbated structural issues for both online and offline merchants –the challenge of selling across multiple channels, the difficulty of logistics, the need to access capital, to name a few,” Samana said.
“SHOP solves for many of these pain points, and we expect more merchants to embrace SHOP’s platform and existing merchants to increasingly leverage its merchant solutions.”
Morningstar analyst Dan Romanoff likes the company, too. “The Shopify fulfillment network is likely to gain significant traction with customers and should help drive strong top-line growth over the next decade, in our view,” he wrote last month.
But Romanoff sees Shopify shares as vastly overvalued, pegging fair value at $496.