Best buy: Shopify vs Amazon

Nobody needs to know that the future of retail is online. It seems that every few months, an iconic chain of shopping malls is deformed, and that consumers generally prefer the convenience, the selection – and, just as importantly, the price benefits – that are available for a streamlined platform powered by the Internet rather than in the past. brick and mortar outpost of school.

Amazon.com (NASDAQ: AMZN) is the dominant dog of this burgeoning universe, and rightly so, with a business figure exceeding $ 250 billion over the last year. Shopify (NYSE: SHOP) Most consumers are not familiar with its transparent platform, but its transparent platform allows more than 800,000 merchants to be available to all potential customers through an online connection. Both stocks have generated decisive wealth for their investors in recent years, but see which of these two investments will offer the greatest potential for capital appreciation in the near future.

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Amazon is everywhere and the most amazing thing at the largest online retailer is the speed with which it grows for a company with its size. Amazon's leakage revenues rise to $ 252.1 billion, an increase of 21% over last summer, which places it surprisingly far from the bottom line. one of three publicly traded companies with a market capitalization of $ 900 million.

Shopify is growing faster. The turnover may have slowed for 14 consecutive quarters (an increase of 48% from one year to the next during its last quarter), but it is obvious that its growth is more than twice as high as Amazon's. Shopify is a much smaller player than Amazon, but net revenues of $ 1.3 billion represent 52% more than when they were perched last summer.

Most Amazon bears will say that the stock is overvalued, but it's a boon when it's opposed to Shopify. Both stocks trade at exorbitant adjusted profit multiples, but only Amazon is profitable on a reported basis.

If we look at the top of the income statement, Amazon will look for 3.7 times its remaining revenue – a rigid multiple for a retailer, but a special offer when compared to the multiple of 32.4 made by Shopify. As part of its defense, Shopify operates an online platform in which margins under optimal operating conditions will be considerably higher than those of a company that relies in part on its own sales of goods.

Shopify is a dynamic company with many potential benefits, but it is naturally riskier than Amazon. Shopify will always be vulnerable to another platform operator offering a better mousetrap at a better price. It's easy to set up an online store on Shopify, but it's just as easy to move it to another location. Buyers of Shopify belong to the merchants and they will follow them elsewhere without realizing that Shopify is no longer in the picture.

The taking of Amazon on the client is much stronger. There are now more than 100 million Amazon Prime customers and they are entangled in a juicy ecosystem in which a single, unique price enables fast delivery at no additional cost and a growing range of digital products, including video and audio streaming services.

Both stocks have the right ingredients to keep beating the market, but if we choose between the two, Amazon seems to be the most careful choice right now. As volatile as it may be, Amazon stock is not as risky as Shopify stock. Amazon also seems better positioned to deal with the potential for an economic slowdown, as consumers will turn to its low-cost products and digital services when the money is tight. Prospects would be darker at Shopify, especially since the merchants on the platform would probably be upset.

Both stocks have been winning and will likely continue to generate gains, but Amazon is the best buy for the coming year.