A furious rally in Shopify Inc. has vaulted the e-commerce retailer to the third-largest company in Canada — underscoring the value of the virtual world in the time of the coronavirus.
Shopify soared as much as 10 per cent to a record on Friday after its Chief Technology Officer Jean-Michel Lemieux said in a tweet that the Ottawa-based company was handling “Black Friday level traffic every day!” as it brings “thousands” of businesses online.
The move extended a seven-day surge to almost 50 per cent, giving it a market value of about $92 billion (US$66 billion) and making it the best-performing stock on the S&P/TSX Composite index so far this year. That put Shopify, which provides tools for companies to sell over the internet, behind only Royal Bank of Canada and Toronto-Dominion Bank as the biggest companies in Canada’s stock market.
After downgrading the stock earlier this month, Raymond James analyst Brian Peterson said he was “dead wrong” as Shopify’s stock has gone “parabolic” since then.
“What we seemingly missed in this dynamic is how quickly COVID-19 may push new merchants to the Shopify Platform,” he said in a report published Friday. “Many businesses needed to establish an ecommerce presence, and SHOP was the primary beneficiary of that.” He has a market perform rating on Shopify.
Investors now see more value in Shopify than Canadian companies that have been around for decades: Brookfield Asset Management Inc. with its billions of dollars worth of real estate, infrastructure and renewable power across the world, as well as pipeline giant Enbridge Inc., Canadian National Railway Co. and Bank of Nova Scotia.
With more consumers shifting online, Shopify is getting a leg up while the value of retail malls and office towers are being questioned, even in a post-viral world.