Summary
Shopify is an e-commerce platform that offers services to businesses of all sizes, enabling them to create their own online store. The company was founded by Tobias Lütke in 2006 after he was dissatisfied with the online stores available at the time. He partnered with Scott Lake and Daniel Weinand to develop the online store on “Ruby on Rails”, an open-source web application framework. Since then, Shopify’s market cap has grown to over $74 billion, peaking at $212.09 billion in November 2021.
Trading Shopify shares might be a great option for many investors, but unfortunately, many of them don’t know how to get started. In this guide article, we will be sharing how to buy Shopify (SHOP) shares for retail investors. We will look at the benefits and disadvantages of buying Shopify shares, factors to consider when trading Shopify shares, the trading platforms available, the fees and commissions you are likely to come across, and thoughts from people on the internet who have traded Shopify shares in the past.
To buy SHOP shares from any country around the world, all you need to do is follow a few simple steps:
- Select an Online Stockbroker
- Create a Brokerage Account
- Deposit Funds
- Buy Shopify Shares
- Manage your Shopify Positions
Buying shares in Shopify comes with its own upsides and downsides. Here are some of them:
Pros
- Diversification of Portfolio
- Great Growth Potential
- Great Stock Performance Compared to its Industry
Cons
- High Volatility
Before you choose to buy shares, it is important that you do your own due diligence and research properly. Here are a few factors you should take into consideration before buying SHOP shares.
Commissions & Fees
Apart from the money spent on buying the actual shares, you will have to pay some fees and commissions to the broker you are trading with. The most common fee you will come across is the spread, which is the price difference between the bid and ask price of an asset, in this case, the Shopify stocks. Usually, dealing desk brokers act as market makers by providing liquidity for traders who wish to buy stocks. They then add a little markup to their bid and sell prices, so as to make a little profit for providing liquidity to the market.
Some brokers also charge a commission for trading with them, which is often a small percentage of the amount traded. Brokers like eToro and Capital.com are commission-free, so they do not charge a commission for trading Shopify stocks.
Stock Brokers Regulation
Financial regulators exist in every country to ensure all parties involved in stock trading play by the rules. These regulatory bodies set rules for stock brokers to abide by to protect traders from scams, hacking, data exposure, and bankruptcy. It is important for traders to confirm that a broker is regulated before they trade stocks with them. You can do this by searching the website of the regulatory body for the broker you want to trade with.
In the USA, the overall financial regulatory commission is the Securities and Exchange Commission (SEC). The Financial Industry Regulatory Authority (FINRA) is directly responsible for regulating stock brokers under the oversight of the SEC. In the UK, the Financial Conduct Authority (FCA) is responsible for overseeing brokers, while the Australian Securities and Investments Commission (ASIC) is the main regulatory body in Australia.
Trading Platforms
A trading platform is a piece of computer software that brokers use to connect the trader to the stock market. Generally speaking, there are two main classifications of trading platforms: proprietary and third-party trading platforms. Proprietary trading platforms are customized trading platforms created exclusively for the broker within which they operate while third-party platforms are open to any stock broker to offer their clients.
Before buying Shopify shares from a stock broker, it is important to check the broker’s platform to confirm that you are comfortable with it. You can do this by using a demo account to test the platform.
Leverage Availability
Leveraged trading is a form of trading that allows investors to open positions larger than would be normally possible with their trading capital. In other words, it allows you to borrow money from the broker to trade bigger positions.
While leverage trading has its benefits, it can be very dangerous. Most regulatory bodies often set leverage limits on different securities based on the volatility of that security. For example, the FCA has a 1:5 leverage limit on shares like Shopify, which means investors cannot trade a position more than 5 times the size of their trading account.
Also, check if the broker offers CFDs. CFDs are derivatives that allow you to trade the price movement of an asset without owning the asset. They trade with leverages and can be complex, even for professionals.
Check the broker you want to trade with to find out if they offer leverages and if the limits they offer are in line with the regulations in your country.
Shopify Stock Performance
Do detailed research on Shopify stock performance over time. You can use tools like Google Finance and Yahoo Finance to see how the stock has performed in the past one day, one year, five years, or throughout its history. Compare the stock performance with other stocks in the same industry (internet services) and with the stock market to see if it has consistently surpassed expectations.
Shopify Past Dividends
Shopify does not pay dividends to its shareholders. Instead, they retain their earnings and invest them into the company to ensure growth and capital appreciation for stockholders. If you are interested in buying Shopify shares, you should decide whether you are willing to play the long game and hold on to the stocks for long, instead of waiting for dividends every quarter or so.
As explained, trading platforms are computer software used by brokers to connect traders to any securities market. Brokers can offer either proprietary trading platforms, which are platforms exclusively designed for that broker and open only to traders registered with that broker, or third-party platforms which are open to use by all interested brokers.
Proprietary and third-party platforms have their benefits and downsides and can be used on desktop and mobile devices.
Desktop Trading Platforms
Desktop trading platforms are trading platforms available on desktop computers and laptops. You can access them by downloading the software application on your device or using the web version online.
Both proprietary and third-party trading platforms are available on desktop devices. Brokers like eToro and Capital.com offer their proprietary trading platforms, while brokers like Pepperstone and Admiral Markets offer third-party trading platforms like MetaTrader 4 and 5 (MT4 and MT5).
You can open a demo account for free to see if the trading platform offered by a broker is suitable for your trading needs.
Mobile Apps
Stock trading platforms are also available on mobile devices if you wish to trade Shopify shares on the go. Mobile devices have the added benefit of ease of use since you can take your mobile phone anywhere and trade on-the-go. These apps (proprietary and third-party) are available on smartphones, tablets, and other mobile devices with access to the internet. To trade with your mobile device, you have to download the trading app on your device’s app store (Google PlayStore for Android devices and Apple Store for iOS devices).
Mobile apps also have the advantage of providing the user with real-time news and notifications, since mobile phone users always have their phones with them. You can use brokers with proprietary trading platforms like eToro and Capital.com or brokers with third-party platforms like Pepperstone and FxPro.
Buying Shopify shares often comes with some fees and commissions, which are different from your investment or trading capital. While these fees and commissions are heavily dependent on the broker you’re trading with, there are general fees most trading brokers charge.
These fees are divided into two in this section: Trading and Non-trading fees.
Trading Fees
Trading fees are fees you pay only when you carry out transactions on your trading account. Some common trading fees you will likely encounter on trading platforms are:
Spreads: The term “spread” refers to the difference between the buying (bid) and selling (ask) price of a financial instrument, in this case, a Shopify stock. The price change between the buying and selling price of the stock is due to market dynamics, liquidity, supply and demand for that stock, and also a small markup added by the broker to compensate for providing liquidity to the investor.
Commission: Some brokers will charge a small commission for trading on their platform. This commission is a small percentage of the trading amount. This percentage is dependent on the broker. Brokers like eToro and Capital.com are commission-free, meaning they do not charge a commission for trading on their platform.
Overnight Fees: You will pay overnight fees on your trading account when you hold a leveraged trading position overnight. This fee serves as an interest for the amount borrowed to open the trade. The amount you will be charged depends on the broker and the amount of leverage used to open that position.
Non-Trading Fees
Non-trading fees are fees you pay when you don’t carry out direct trading transactions on your trading account. Some non-trading fees associated with trading Shopify shares are:
Inactivity Fee: Brokers charge inactivity fees on your trading account when you leave your account dormant for a long period of time, like 3 months or more. On eToro, for example, if you don’t use your account for a whole year, they will charge you a $10 fee each month.
Currency Conversion Fee: Brokers often have a list of accepted currencies, like the US Dollar or British pound sterling. If you live in a country where other currencies are the legal tender, you have to convert to the accepted currencies before you can trade. Most brokers charge a currency conversion fee to facilitate this conversion.
Deposit and Withdrawal Fee: Some brokers charge you a fee when you deposit and withdraw money to and from your trading account. Some brokers do not charge this fee.
All brokers differ in the way they charge these fees and commissions on their platforms. The fee and commission method you choose to use depends on your trading strategy.
About Shopify (SHOP)
Shopify is an e-commerce company that was created in 2006 by Tobias Lütke, Daniel Weinand, and Scott Lake. Lütke and Lake originally tried to start Snowdevil, an online store for selling snowboarding equipment. They were dissatisfied with the available e-commerce products online, so Lütke, who was a computer programmer, decided to create his own.
In 2009, they also created an API and app store. The API allows e-commerce business owners to create online applications for Shopify which would later be sold on the Shopify app store. To this day, Shopify’s core platform has remained on Ruby on Rails, which has helped them improve their scalability. This has made it possible for e-commerce business owners to open their online stores and sell their products on the platform without having to be software developers.
On April 14, 2015, Shopify went public, trading on the New York Stock Exchange and Toronto Stock Exchange with the ticker symbols ‘SHOP’ for the NYSE and ‘SH’ for the Toronto Stock Exchange. Shopify shares have grown steadily since its IPO, until its peak in November 2021, when it sold at around $166 per share. As of August 25, 2023, the current price of Shopify shares is $54.95. The company has a total of 1.3 billion shares outstanding and a market capitalization of $70.47 billion.
We went through two of the most common social communities on the internet, Reddit and Quora, to find out what people thought about buying Shopify shares.
Reddit, the front page of the internet, is home to over half a billion people (called Redditors) who give unbiased and unfiltered reviews about everything from sports to fashion and stocks. We went through a few threads on Reddit to see what people had to say about how to buy Shopify (SHOP) shares and if they were worth buying.
One of the threads we saw was started by a Redditor asking what others thought about the massive drop in Shopify stock price after the massive rise during the COVID-19 era. One Redditor commented on the price drop, telling the Original Poster (OP) not to let their understanding of the stock be driven by price shifts. According to this commenter, the price drop didn’t mean that the company was worthless, as the stock price might not be a reflection of the company at that point. The commenter also thought Shopify was a great company, but the stock was overpriced during the COVID-19 pandemic era, so the price drop just means that the stock was going back to its actual value.
Another Redditor agreed with the first, stating that Shopify shares were overpriced because the company had a strong monopoly in the e-commerce industry. However, the Redditor also stated that Shopify was so far ahead of its competition that it was almost impossible to catch up with them, making it a good investment stock.
Quora
Quora is another large social community with hundreds of millions of users sharing their views on a wide range of topics. We visited the platform to see what users there thought about buying Shopify shares.
On one thread, one Quora user asked if buying Shopify stocks was a good investment. Another user responded, saying that they thought buying stocks in Shopify was a good investment for three reasons: their fast growth annually, their monopoly in the industry, and their huge customer base. For this reason, he thinks they have good long-term potential.
On another thread, a Quora user wanted to know how to buy SHOP shares. Another Quora user told the OP that he needed to open an account with a stockbroker and search for the SHOP ticker symbol on the brokerage platform.
Bottom Line
Shopify is a giant e-commerce company that has grown tremendously in usage and value since it was founded in 2006. Its shares are listed on the New York Stock Exchange and Toronto Exchange. Traders who don’t know how to buy Shopify (SHOP) shares can simply register with a regulated broker in their country with access to the NYSE and TSE.
When searching for qualified brokers, traders need to look at factors like leverage availability, commissions and fees, and the trading platform (proprietary or third-party) used by the broker. Traders should also consider the performance of Shopify stocks.
Traders online generally agree that Shopify stocks would be a good long-term investment because of its large customer base and monopoly in its industry. Still, it is important to do your own research before committing your capital to trading Shopify shares.
Q & A
There are about 1.292 billion outstanding Shopify shares.
The largest Shopify shareholders are: Baillie Gifford & Co. (5.94%), Morgan Stanley Investment Management (5.13%), and Capital Research & Management Co. (5.12%)
The total market capitalization of Shopify shares is $75.56B, according to Google Finance.
You can buy Shopify shares by using one of the regulated brokers in your country with access to the New York Stock Exchange or Toronto Stock Exchange. Register with the broker, log into your trading account, and search for the Shopify ticker symbol. Enter the amount you wish to buy and start trading.
Shopify was created by Tobias Lütke, Daniel Weinand, and Scott Lake in 2006.
Shopify became a public company on April 14, 2015, when it launched its IPO on the New York Stock Exchange and Toronto Stock Exchange.
The headquarters of Shopify is located in Ottawa, Canada.
According to their financial reports from the first quarter of 2023, Shopify had an operating loss of around $193 million, or 13% of revenue. They were profitable in 2021, pulling in about $2.9 billion in net profit.
Shopify had an annual revenue of $2.929B in 2019, $4.612B in 2020, and $5.6B in 2021. This means it has had an average annual revenue of around $4.38 billion in the last 3 years.
You can buy Shopify shares on any brokerage platform that offers access to the New York Stock Exchange or Toronto Stock Exchange.
Whether or not Shopify shares are a good buy depends on your trading strategy and your assessment of the SHOP stock and the e-commerce industry as a whole.
You can buy Shopify shares as a beginner, provided you have undergone important training for stock trading and have spent some time trading with a demo account to understand how to trade stocks better. Be warned that live stock trading is a risky investment and you can lose your capital when you trade with your real money.
Yes, you can trade Shopify as a CFD with brokers that offer CFDs to their registered customers.
The minimum amount you can invest in Shopify stock depends on the broker you trade with and their minimum amount requirements.
The fees and commissions you may encounter when buying Shopify shares depend on the broker you trade with. Brokers like eToro and Capital.com are commission-free, meaning they don’t charge commissions on stocks traded on their platforms.
No, Shopify doesn’t pay dividends on its shares.
Shopify is listed on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange.
Some of the best online brokers to buy Shopify stocks are eToro and Capital.com.
