HomeBlogShopify Inc.: From a snowboard shop to a $10 billion e-commerce ecosystem

When Tobias Lütke, Daniel Weinand, and Scott Lake embarked on building an online store back in 2004, little did they know that they would end up creating the world’s largest e-commerce platform. Growing from a mere tool to a platform and eventually into an entire e-commerce ecosystem, Shopify powers over 1 million merchants worldwide to start, run and grow their business independently. At the same time, it has managed to offer consumers a wider choice for their online shopping, fuelling competition and driving up quality.  
 
With so much power in a singular platform, Shopify’s rise has been breathless so far. Its strong gains and revenues ballooning from $67 million in 2014 to $1.6 billion in 2019, have also boosted its stock price and its market capitalisation. As e-commerce continues to take more and more of the retail landscape, Shopify has further room to grow.


A brief history of Shopify


The Canadian multinational e-commerce company headquartered in Ottawa, Ontario may have today transformed into a household name, becoming the go-to platform for creating online stores, however, Shopify was once an online store itself. Lütke was working as a programmer in 2004 when he decided to pursue his passion and open an online store called Snowdevil through which he aimed to sell snowboards and snowboarding gear from third parties. 

In his attempt to make his dream a reality, he longed for a simple and user-friendly tool to build his store’s website, yet everything available out there was short of that. And so just like many other startups, Shopify too aimed to find a solution to a problem the founders themselves had experienced in the past. Using an open-source web application framework known as Ruby on Rails, Lütke and his team built a simple and straightforward product that eventually became what we all know as Shopify, giving small merchants the tools to sell successfully their products online. 

By 2009, the e-commerce platform launched an API (application programming interface) platform and an app store which allowed developers to create applications for Shopify online stores and then sell these on the Shopify app store. A year later, the platform joined the mobile revolution after launching a free mobile app. Enabling Shopify store owners to manage their store directly from their mobile device, the first mobile app was available on the Apple App Store. At the same time, it also began the Build-A-Business competition which brought in several well-known entrepreneurs such as Richard Branson, Eric Ries and others to mentor individuals looking to build their business. 

Then, in 2013 the company rolled out its payments platform, which allowed merchants to accept credit card payments without having to rely on a third-party gateway. The company ushered in 2015 with 140,000 stores and $3.7 billion in sales and massive growth in mobile commerce.

In the past three years, Shopify launched Shopify Studios, a full-service television and film content and production house, as well as Shopify Chat, a native chat function that enables merchants to have real-time conversations with their customers, while it introduced a Bluetooth-enabled debit and credit card reader for brick-and-mortar retail purchases. Amassing a score of accolades along the way, Shopify has been awarded the title of Canada’s Smartest Company in 2012 and became a finalist for Startup of the Year, while it was crowned Employer of the Year in 2014 by the Canadian Startup Awards. 

Today, Shopify’s platform services over 1 million businesses in approximately 175 countries ranging from small, individual sellers to prestigious giants like the likes of Tesla, Hasbro, Budweiser and others. 

Fun fact

When the recreational use of cannabis was legalised in Ontario in 2018, the province’s government struck a deal to use Shopify’s e-commerce platform for cannabis sales online and in stores as part of its plan to be the province’s sole distributor.

Shopify goes public

Shopify went public in May 2015, trading on the New York and Toronto stock exchanges. Shares started trading at $28, more than 60% higher than its original $17 offering. At the time of its IPO, Shopify was yet to become a household name, however, it had gone through a year marked by incredible growth. Through its IPO, it managed to raise more than $131 million, selling 7.7 million shares. 

The e-commerce giant generated $45 million during its first quarter as a public company, yet shares dropped to an all-time low at $18.48 a year later. Then in 2017, Shopify announced an integration with Amazon (AMZN) that would allow merchants to sell on Amazon’s platform through their Shopify stores. Following the news, its shares skyrocketed, hitting $100 that year. 

So how much would an initial $10,000 investment on the company’s IPO have generated? Assuming that you would have been able to purchase 588 shares and you held onto these, as of February 2020 when the company was trading at about $486 per share – a gain of roughly 2,750% over its IPO price – your $10,000 investment would today be valued to almost $286,000.

What’s in store for Shopify’s stock?

The company’s stock has soared 4,600% since it went public 5 years ago, reaching $200 in early 2019, $500 in early 2020 and climbing to a record all-time high at $1,134.32 in September 2020. As the COVID-19 outbreak has brought the importance of e-commerce to the fore, shifting consumers’ shopping online at an accelerating pace, Shopify marked exceptionally strong second-quarter results, making its way among the top ten largest companies on the Toronto Stock Exchange (TSX) by market cap. At $136 billion, it is ahead of top e-tailers like eBay and Etsy, making it a top share with great growth potential.

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