The Shopify initial public offering (IPO) date is set for May 21, 2015. The e-commerce software provider will be listed on the New York Stock Exchange under the ticker symbol “SHOP.”
With more than 162,261 merchants using its platform, Shopify enables small to medium-sized businesses to design and manage online storefronts. Below is everything you need to know about the Shopify IPO.
What is the Shopify IPO Price?
Shopify stock is expected to do its IPO in the range of $12.00 to $14.00 per share. IPOs in 2015 have averaged a gain of 13% in the first day of trading. The big question is whether the Shopify IPO will follow this pattern.
How Much Money Will the Shopify IPO Raise?
Shopify will look to tender 7.7 million shares at a price anywhere from $12.00 to $14.00 per share. At the bottom of the range, the Shopify IPO will raise $92.0 million, and at the upper range, $108 million.
The other top tech IPOs of 2015 raised amounts in excess of what Shopify is looking for. InovalonHoldings, Inc. (NASDAQ/INOV) secured $600 million, GoDaddyInc. (NYSE/GDDY) raised $440 million, and Etsy Inc. (NASDAQ/ETSY) received $270 million.
How Much is Shopify Worth?
If Shopify manages to raise more than $100 million, the company will be worth $1.0 billion. At present, GoDaddy is worth nearly $4.0 billion and Etsy’s market capitalization totals $2.3 billion.
The $1.0-billion price tag would make Shopify worth roughly 10 times its total 2014 sales. In comparison, eBay Inc. commands a price-to-sales multiple of 4x and Amazon.com, Inc. is worth 2x sales.
For a more detailed analysis of Shopify’s valuation, read this article on Profit Confidential.
What is Shopify’s Business Model?
Those looking to sell goods or services online can use Shopify’s e-commerce platform to set up a storefront. Online merchants are able to create a unique web page, set up a shopping cart, accept payment through several methods, and manage inventory.
For these services, Shopify charges a subscription fee ranging from $29.00 to $179.00 a month. An additional source of revenue comes from the sales of storefront themes, apps, the registration of domain names, and processing payment fees.
For more analysis of Shopify’s business model, see this Profit Confidential article.
What is Shopify’s IPO Outlook?
Shopify continues to lose money from operations. Possibility of further losses is not good news for Shopify investors, taking a look at the company from a fundamental perspective.
For example, Shopify has $59.0 million in cash on the balance sheet, but has reported a net loss since 2012. The losses have accumulated to a negative retained earnings total of $33.0 million. (Source: SEC F-1 Filing, last accessed May 12, 2015.)
The numbers suggest that Shopify’s financials are shaky at best, despite the company’s exponential revenue growth to-date.
At 2012 year-end, revenues stood at $23.7 million. As of 2014 year-end, revenue climbed to $105 million. This was driven by an increase in merchants who use the platform—rising from 41,000 in 2012 to 162,000 as of March 31, 2015. (Source: SEC F-1 Filing, last accessed May 12, 2015.)
Shopify follows the theme of other tech IPOs in 2015; strong growth, but poor profitability. Thus, Shopify may also follow the other theme of disappointing stock price performance. For example, GoDaddy declined nearly seven percent since going public, and Etsy decreased 42%.
For more analysis on the prospects of the Shopify IPO, check out this article on Profit Confidential.