Investment Review day 30 of 50: Shopify $SHOP
Shopify is a leading global commerce company providing trusted tools to start, grow, market, and manage a retail business of any size. With an emphasis on e-commerce, Shopify gives businesses of all sizes access to online storefronts, payments, marketing, shipping and customer engagement tools, powering over a million businesses in more than 175 countries.
If I were noting my relationship status with $SHOP on social media, this would be a firm ‘it’s complicated’!
I bought stock steadily throughout 2016, very quickly getting to a full 6% allocation (the point at which as a rule I stop adding new money). Somewhat similar to my Netflix post a few weeks ago, my timing was golden, and Shopify’s heady ascent left me needing to trim for portfolio risk management purposes several times between 2019 and 2021 (a typical journal entry from that period said ‘Love the company, but too heavyweight in portfolio. Reducing from 25% to 16% allocation’).
My Nov 2021 sell pretty much marked the peak for the valuation, and $SHOP was punished during the cyclical reversion out of growth stocks that ran rampant in 2022, a problem compounded by over hiring during the pandemic.
I still believed in the company’s business model and competitive positioning so added a little in Feb 2022, and in the context of my overall portfolio, around this period Shopify represented about 10% of my portfolio.
I became less enamored with leadership though last year. The company committed to investing in logistics, acquiring Deliverr for $2B, and then six months later seemingly realised that it could never compete with Amazon, and so sold its logistics arm to Flexport. This strategy makes sense, but overall it represents a rather expensive unforced error. It felt like time to cut this back to an allocation that matched my shaken conviction level, so last May I sold a chunk to take it down to a 5% allocation, and then in December I cut it back to sub 3%.
Shopify treated me very well, delivering the large majority of my portfolio returns between 2016 and 2021, and essentially being the single investment that pushed me across the line and enabled me to (semi-)retire in my forties to focus on managing my portfolio full-time.
I have several companies in my portfolio today that I think could be the next major driver of returns, I’ll be posting about a couple of those over the next few days!
—
I’m putting my holdings under the microscope. Over the next 50 days I’ll break down my whole investment portfolio. Wins, losses, and the ‘why’ behind it all. And on day 50 I’m going to share my full portfolio so you can see how my strategies played out in the real world over the last twenty years and what we can all learn together. Follow along for the journey! #StockAnalysis #50daychallenge #ecommerce
