Originally posted on https://financhill.com/blog/investing/shopify-stock-forecast
Shopify Stock Forecast: The digital revolution has transformed the way people shop. In 2016, there were 1.66 billion digital buyers worldwide. Analysts predict that number will grow to 2.14 billion in 2021. In 2019, e-commerce made up 13.7 percent of retail sales around the globe. Those figures are expected to reach 17.5 percent of total sales by 2021.
Perhaps the most remarkable thing about buying and selling products online is that businesses of every size can now connect with consumers in any market. Many of the traditional barriers to entry are gone, and entrepreneurs don’t need big marketing and distribution budgets to reach a niche audience.
There is one obstacle to online sales: managing payments. Small businesses and individual sellers lack access to the most popular payment methods. That’s where Shopify comes in. With easy-to-use software and a reasonable fee structure, the Shopify platform makes it possible for anyone to accept online payments.
The question for investors is this: Shopify [NYSE: SHOP] might have a substantial portion of the market for now, but a variety of competitors are working hard to capture some of that business. Can Shopify continue to grow and expand its features in a way that generates value for shareholders?
Some e-commerce experts believe Shopify [NYSE: SHOP] has driven the transition to e-commerce almost single-handedly since its launch.
That might seem hard to believe, since the brand is nearly invisible. Though more than 100 million individuals used one or more of Shopify’s features to facilitate a transaction in 2016, most had no idea they were using Shopify software.
The brand’s near-invisibility is intentional. The platform’s biggest draw is its value proposition for businesses. Shopify clients enjoy end-to-end operational support, from checkout to shipping and beyond, but there is no sign that a third party is handling critical elements of the transaction.
The earliest version of Shopify [NYSE: SHOP] launched in 2004, but the company really took off when it went public in 2015. It has successfully snatched e-commerce market share from massive online retailers like Amazon [NASDAQ: AMZN] and eBay [NASDAQ: EBAY], and it continues to improve and update product offerings to stay competitive.
Users don’t need any technical expertise to get started. In fact, they don’t even need a lot of business expertise.
Shopify makes it simple to create and launch an online shop, manage payments, track inventory, and ensure reliable shipping. The platform offers state-of-the-art analytics, so sellers can examine sales and marketing trends, and the tools can be scaled to serve the needs of any size business.
Shopify has expanded its product line to include customized solutions for large organizations. Major corporations like GE [NYSE: GE] and Tesla [NASDAQ: TSLA]have chosen Shopify [NYSE: SHOP] in lieu of designing their own e-commerce tools, and influencers like Kylie Jenner and Drake rely on the platform to sell their branded products.
They can eliminate distributors that act as middlemen and enjoy all of the benefits of a direct relationship with consumers for a price that rivals alternative sales and distribution options.
Shopify rose to its position as a leader through innovation and inclusiveness. It continues to design advanced tools that allow individuals and businesses of all sizes to participate in the changing global economy.
If, as analysts predict, Shopify [NYSE: SHOP] is able to maintain its position as a leader in innovation and inclusiveness, there is plenty of opportunity for shareholders to benefit.
In June 2019, Shopify leaders announced that a variety of new tools and features are rolling out in the coming months, and the market responded enthusiastically. Shares went up by 8 percent, putting the stock price at an all-time high.
First, the company will enhance its Shopify Plus platform, which is designed to meet the needs of major retailers. Clients will gain visibility into detailed data and analysis that is otherwise only available to organizations with skilled analysts on staff.
The second major enhancement is improved translation services. Shopify [NYSE: SHOP] has added 11 new languages to its existing selection, and an advanced Translations API (application programming interface) will automatically display clients’ content to consumers in their preferred language. This dramatically simplifies the process of reaching an international audience.
Third, Shopify is making it possible for clients to keep pace with changing consumer expectations without requiring additional technical knowledge. Shopify clients will have the option of adding videos and 3D product models to their storefront.
Most important of all, Shopify is launching a network of fulfillment centers where products will be packed and shipped on behalf of clients. This new service puts Shopify [NYSE: SHOP] in direct competition with Amazon, which could generate substantial revenue in coming years. If all goes well, that means good news for current shareholders, as well as those who purchase Shopify stock at today’s prices.
Of course, no investment is without risk, and Shopify [NYSE: SHOP] comes with its fair share.
The biggest concern is that after Shopify’s dramatic rise in 2019, a drop is inevitable. At the very least, the air is getting thin up at the lofty prices Shopify trades at. Investors who are looking for short-term gains are unlikely to see any with Shopify and in fact, slowing momentum is a reason to expect short-term losses.
However, Shopify’s long-term prospects are excellent. The trend towards e-commerce is expected to grow exponentially in coming years, and Shopify has the best platform to meet the needs of clients who want to participate in the global e-commerce economy.
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