Shopify update: patience is a virtue
While recent strength in Shopify’s stock brings the price back to where it was at the time of Investing Journey’s last post on Shopify, it is still down -50% over the past three months. I remain optimistic on Shopify but patience will likely be required for a few quarters yet. For one thing, Shopify will be spending a lot in 2022 on building and debugging its fulfillment network.
There are certainly no signs of a turnaround at this point in insider trading on Shopify. I checked INK Research to see if any executives and directors had made purchases. They had not. In fact, they had sold a lot of Class A shares recently through rights exercise, bringing net sales by insiders over the past year to $23.7 million. CEO Toby Lütke did not make any recent sales.
The multiple-voting Class B shares of Shopify come with 10 votes compared to 1 vote for the Class A shares. The biggest holders of the Class B shares are Lütke and his mentor on the Shopify board of directors, John Phillips (retired corporate lawyer and former angel investor who first invested in Shopify back in 2007). With each Class B share carrying 10 votes, Lütke and Phillips retain control of Shopify through possession of over 50% of the Class A and Class B shareholder votes.
I have also done an analysis of Shopify in the Feb. 7, 2022 Globe and Mail