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Shopify has very little balance sheet risk: Chris Stuchberry

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Shares of Shopify (Shopify Stock Quote, Chart: TSX, NYSE:SHOP) have had a tough time clawing back losses suffered over the summer, but investors shouldn’t worry too much, says Chris Stuchberry, portfolio manager for Wellington-Altus Private Wealth, who maintains that the Canadian e-commerce company is looking solid.

Canadians celebrated the arrival of legal recreational cannabis yesterday, many of them doing so by completing online transactions through Shopify-enabled sites. Government-run stores in BC, Ontario, PEI and Newfoundland are all using Shopify to conduct their online pot business, with the company reporting no hiccups during the first 24 hours and reportedly averaging 100 transactions per minute across the country.

Ahead of the company’s third quarter financial report due on October 25, investors are hoping for a better result than that from its second quarter in late July when the stock fell sharply in reaction to a slowdown in growth of a key indicator, gross merchant volume, which represents the total dollar amount of sales made by all vendors on Shopify’s platform. Shopify posted Q2 beats for both revenue and profit yet the share price lost 22 per cent of its value over the ensuing two days. Since then, SHOP has been up-and-down in trading.

But while volatility seems to be the name of the game for high-flying tech stocks like Shopify, the company is looking a lot more risk-averse than cagey investors might imagine, says Stuchberry.

“Shopify raised money in the public market several times so they’ve got a fabulous balance sheet and there’s not a lot of risk there,” says Stuchberry to BNN Bloomberg. “When you look at the company, they’re not burning a lot of cash, so with the amount of cash they have, they can go for a really long time and figure out a lot of this navigation.”

“If you really like the name and you like the growth you’re probably destined to see quite a bit more volatility, but it’s a good company,” he says.

Last month, Shopify announced it will invest up to $500 million in a downtown Toronto office, part of a 15-year deal where the company will be the anchor tenant of a building at the corner of Front Street West and Spadina, set to open in 2022. Shopify also recently opened its first bricks-and-mortar store, this one in Los Angeles, which aims at enabling local companies and entrepreneurs to grow their businesses.

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About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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