Don’t bet against Shopify, Mike Newton says

Tech IPOs are the talk of the market these days, with ride-hailing company Lyft debuting to acclaim on Friday and a number of other high-profile companies expected to go public later this year.

And while one theory has it that more interest in the shiny new objects might mean less attention paid to tech’s less-new names, like Shopify (Shopify Stock Quote, Chart TSX:SHOP) here in Canada, Mike Newton of Scotia Wealth doesn’t agree.

“The thesis is that because of all these IPOs that are coming out, people are taking money off the table. I’m not entirely sure that they would be looking at the Shopify name in particular. There are all kinds of enterprise software names in the US, little names where a lot of people have made a lot of money,” Newton told BNN Bloomberg Thursday.

Lyft started trading on Friday at $87.24 per share, significantly higher than the IPO price of $72, and raising about $2.3 billion for the company on its 32.5 million shares. (All figures in US dollars.) The party is expected to continue next month with competitor Uber planning to list then, potentially followed by other names such as Slack and Pinterest.

Shopify’s share price has risen dramatically in recent months, rocketing up 46 per cent year-to-date, and Newton says that the stock has shown admirable resiliency over the past couple of years.

“I own Shopify. It just got into the TSX 60 weighted Index. “It’s a story that has a few short reports on it and a lot of negativity surrounding it, and yet in the face of that, it has risen quite nicely.”

Shopify last reported its earnings in February where it generated 54 per cent growth in revenue to $343.9 million for the third quarter of its fiscal 2018. The e-commerce company also beat the consensus expectation on earnings, coming in with an adjusted profit of 20 cents per share versus the expected 15 cents per share.