Shopify Files For $7.5B Mixed Shelf Offering Ahead Of Earnings


Shopify (SHOP) has filed for a $7.5B mixed shelf offering to give it the right to sell several different types of securities. These include class A shares, preferred shares, warrants, debt securities, subscription rights and units.

According to the filing “Shopify Inc may offer and issue from time to time Class A subordinate voting shares, preferred shares, debt securities, warrants to acquire any of the other securities that are described in this short form base shelf prospectus… for up to an aggregate offering price of $7,500,000,000 (or its equivalent in Canadian dollars or any other currencies), in one or more transactions during the 25-month period that this Prospectus, including any amendments hereto, remains effective.”

Shares in the Canadian e-commerce giant are up 150% year-to-date and the company is gearing up to report its earning results today before market open.

Going into the print Oppenheimer analyst Koji Ikeda has a hold rating on the stock without a price target.

“From a tactical view, we are positive into the print, as we believe Shopify will post results that will beat Street estimates. As such, we are raising our revenue and profitability forecast for SHOP today” the analyst comments.

He explains that his positive tactical stance is supported by proprietary tracker data, correlation analysis, and scenario analysis, which suggest there is good upside (i.e., ~7%) in his “Mid” scenario to the 2Q consensus total revenue estimate.

However despite this positive tactical view into SHOP’s 2Q results, Ikeda maintains his “12- to 18-month Perform rating on SHOP, as its premium valuation compared its Tier-1 SaaS peers (i.e., ~50x vs. ~29x EV/2020 revenue) keeps us on the sidelines for now.”

In contrast Goldman analyst Christopher Merwin believes that Shopify will benefit from the e-commerce wave, which “would provide sustained tailwind to SHOP’s gross merchandise volume (GMV) growth and by extension its merchant solutions revenue.” He has just upgraded his rating on SHOP from hold to buy.

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 9 Buys, 14 Holds and 1 Sell. The average price target of $932 implies downside potential of 5%. (See SHOP stock analysis on TipRanks).

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