Two factors that put Shopify ahead of its competitors, according to management. Is it time to buy the stock?

Concerns about the economy have led many e-commerce stocks to struggle this year. Shopify (NYSE: BOUTIQUE), WayfairAnd Etsy have all fallen more than 10% in the last six months alone. Even the mighty Amazon barely managed to stay in the green during this period.

Investors are fearing the worst because of a possible economic slowdown next year. But Shopify management believes the company is in a better position than many of its competitors.

Shopify is growing faster than its competitors

On August 7, the company reported results for the second quarter, which ended June 30. Revenue of $2 billion for the period was up 21% from a year earlier. And if you exclude the effects of the sale of its logistics business, that growth rate is even higher, at 25%. For the current quarter, the company still expects revenue growth to be between 25% and 30%.

Shopify has generally been one of the best performing players in e-commerce compared to its competitors.

What is the secret of Shopify?

On the recent results conference call, Shopify President Harley Finkelstein pointed to two main reasons for the company’s success. “I think a big part of why we’re not seeing the same thing that others are seeing is simply because we have merchants in a multitude of verticals and a multitude of geographies,” Finkelstein said.

Ultimately, it all comes down to versatility. Merchants can sell on Amazon, Etsy, and Wayfair, but they have much more control over this process with Shopify. It can help them launch a store quickly and easily and integrate it with their existing site. Or, they may not have a website at all and simply want to create an online store through Shopify.

As a result, the process is much more adaptable to different business models, with the flexibility to meet the needs of merchants no matter the industry, product or service – or even what part of the world they are in. Shopify can help anyone sell online.

As Finkelstein noted, Shopify is present in over 175 countries. Amazon, by comparison, also has a broad global reach and can ship to over 100 countries, but there are only 21 marketplaces. By being able to reach a broader and more diverse set of merchants and customers, Shopify is less susceptible to specific market or industry conditions, and can therefore generate better sales growth than its competitors.

Is Shopify Stock a Good Buy?

Despite the company’s encouraging numbers, the stock is down 12% year-to-date. The company is generating good growth, but earnings are still quite weak, so the stock is trading at 70 times its prior-year earnings. price/earnings/growth ratio At a ratio of 1.1, however, it could represent good value for investors who are willing to buy and hold for the long term.

But in the short term, depending on how the economy plays out, the stock price could be choppy. The company’s business isn’t entirely resilient to the economy – Shopify’s growth has faltered in 2022 due to falling interest…