National Bank analyst Richard Tse weighed in with a few thoughts on Shopify Inc (US) (NYSE:SHOP), after the Canadian e-commerce software maker announced an offering of 5.5 million Class A subordinate shares at a price of US$91.00 per share. That offering would result in 6% dilution.

Tse sees the proposed equity raise as a surprise given Shopify’s $400 million of cash on the balance sheet at the end of Q1 and positive free cash flow.

“While the use of proceeds is to broadly invest for growth, we can’t help but think it signals acquisitions – and potentially even a large transaction even if what we’ve seen thus far from the Company are small tuck-in technology transactions. All in, while the transaction is dilutive in the near-term with added risk (via cost of capital and potential M&A), we believe that risk is offset by increased flexibility to drive growth,” the analyst wrote.

As such, Tse remains bullish on SHOP shares and reiterates his Outperform rating and US$100 target price, which implies an upside of 11% from current levels.

“We continue to believe Shopify is early in this rapidly growing e-commerce market with a market share of +5%. Like other disruptive leaders, we believe the upside in the stock comes from the underlying fundamental growth as we look beyond the short-term,” the analyst concluded.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Richard Tse has a yearly average return of 12.3% and a 58% success rate. Tse has a 26.7% average return when recommending SHOP, and is ranked #550 out of 4571 analysts.

Out of the 14 analysts polled by TipRanks (in the past 3 months), 9 rate Shopify stock a Buy, while 5 rate the stock a Hold. With a slight downside potential of about 3%, the stock’s consensus target price stands at $87.73.