Rational Investing - Cameron Stewart, CFA 对 $SHOP 的判断变化

Um, interesting Shopify integration.

Shopify by the way is another great stock that thing is is continue to be just very expensive. Uh but is just a tremendous business model. It really really is a phenomenal business model. Um I just wish it were cheaper.

I'm going to have to keep going pretty soon. It's uh se look at this. Look at look at Shopify. Just this is probably the last stock we'll take a look at. 73 times earnings, 12 times revenue. free cash flow yield 1.3%. But let's just look at some charts for Shopify. Look at this revenue curve. Really, really um fantastic. Maybe these guys can continue to go. I mean, what's neat about this business is they have fees associated with all the money that rolls through, right? These guys host websites for online businesses. Um, they have tremendous back-end integr integrations and checkout optimizations and membership uh optimizations that make running a business at scale easy for small entrepreneurs. And now even at even at midsize and large companies can use use Shopify. uh they take a fee. They use Brainree as their merchant processor uh and they get merchant processing fees on every dollar. So think of them as like an American Express or a Visa that um takes a small percentage of all the dollars flowing through. That's a great business model. If you have trillions of dollars flowing through your network and you're getting fractions of a penny as that cycles through, you don't have to do a lot. You don't have to sell the goods. That's what your customers do. They sell the goods and you just take a small small rip off all the money that runs through your infrastructure. And what you have to do is maintain the infrastructure.

See us they have a term for it. I um free cash flow for Shopify. just crossed $2 billion, continues to spike. That's fantastic. Debt levels are negative. They have no debt in cash. They have no inventory. Um why are they issuing shares? These these tech companies just they just why? You have so much money and you continue to put shares. Thankfully, it seems like it's ebbing and they're maturing and they're stopping to and the ROIC is is low, but but actually this is interesting. It's actually growing as they you'll notice here these two charts as they look look as they slow down their [clears throat] um their share issuance right that that line starts to curve flat that's their share issuance the share growth means they're issuing less stock uh and their earnings will grow their uh investment return their ROIC is growing nicely they just crossed double digits and it's kind of like going in an upward direction which is great This is what I wanted. Their GMV gross merchandise volume last quarter, one quarter was a hundred billion dollars of merchandise flowing through. That's up 35% year-over-year. Um, and they take a small rip off of that that money that flows through. So that's what they are trying to build. Um a hundred billion in one one quarter is uh is driving their under underlying revenue. So it says the GMV is the total dollar volume of merchandise sales processed through the Shopify platform. It is not Shopify's revenue. Correct. It's not their revenue. Um, Shopif Shop Shopify takes a small percentage via payments, subscriptions, merchandise solution fees. So, the hundred billion dollar figure overstates the company's actual economic capture by roughly 30x, which is fine, right there, because they're taking a percentage of that money. Um, let's see, but the same the same is true with Visa or American Express, right? the the money, the total money put on those cards is not their revenue. They take a rip off that money. But what it's interesting is like in times of inflation, right? They don't have to change their rates. The customers raise their prices and Shopify's revenue naturally goes up because they're taking a a percentage of the money that flows through.

All right, guys. That's going to do it for me. I got to uh sorry, dumb question. That's my basic clueless when it comes to AI. But can companies just build their own website nowadays without using platforms such as our um yes you can. You don't you don't you're not using Shopify for their so yes you can actually build a website um and we are doing it in our own business and lots of other businesses do it. Think of a website as think of a website as just what you see physically here. But then you've got, let's say you are a product company and you sell shoes, just to stick on the Nike thing, and you have lots of shoes. Let's say you have or you're a makeup company. Let's do a smaller. You have you have a makeup company and you have a hundred different types of makeup products. you have those different SKUs and let's say each makeup comes in different colors. So each each makeup has 10 different colors to it. You have 100 SKs times 10 different colors each. That's a thousand individual SKs. You need to be able to put that on your website, and then not only let someone choose what product they want, what color they want, but like anyone else, if you have a customer that's checking something out, you might want to offer them something else at checkout. So, that popup that says, "Hey, thanks for buying this lip lip gloss. Uh, how about uh a cool hair band to go with it?" Uh, and you can get a discount on that hair band if you check out right now. Well, that's a a a cart upsell. That upsell technology of how to position it on the website, what it looks like, so forth. All of that is um engineering work that needs to happen. Could you do it? Yes. Is it cheaper just to go to Shopify and say with one button click have that capability unlock in a second and spend your dollars as a business inventing a better makeup in this instance or buying better go buy new customers with that money or do you as a c as a company want to spend that money on an engineer to go build a website that Shopify has already built and has already optimized. Right? So it's it's a it's a capital allocation decision within a company. And I will tell you the smart businesses do not reinvent the wheel. You go to the best pract you you go to the dominant provider and you say hey I want your thing what you going to charge me 3 4%. Great. sold. Mark up my product 3 4% to pass through the cost and work on take all of your money that you that you have as your own capital and work at coming out with the best product to compete in the marketplace. That's where you need to spend your money and finding businesses that can make that capital allocation decision are businesses that you want to put your money in. All right, guys. That's the lesson. That's why you should look at Shopify. Uh well, don't invest in it. I don't know if you want to invest in it. This is not that channel. It's expensive, but it's a phenomenal business and it's very sticky.