Marijuana may take Shopify stock price to new heights
E-commerce company has established itself as the ‘go-to platform’ for cannabis
NEW YORK— As recreational cannabis becomes legal in Canada starting next month, Shopify Inc. is emerging as the place to get it. For investors, that means there’s potential for the e-commerce company to smoke expectations.
Several Canadian provinces have picked Shopify to run their e-commerce websites and the company has also signed deals with marijuana companies including Canopy Growth Corp., KeyBanc says.
Cannabis is an “opportunity no one is talking about,” analyst Monika Garg writes.
The cloud-based commerce platform is already carrying billion-dollar brands like Fashion Nova, Rebecca Minkoff, LeSportsac and Kylie Cosmetics. Having established itself as the “go-to platform” in this sphere, Shopify already has a leading position in Canada cannabis. With retail sales starting Oct. 17, the opportunity could serve as a driver for both revenue and gross merchandise volume.
KeyBanc compares the estimated sales in Canada to Colo- rado’s cannabis legalization experience.
With a population of about 5.6 million people, Colorado showed $1.5 billion of cannabis sales in 2017.
KeyBanc estimates that with a population of about 36 million people in Canada, the estimated annual sales could be around $10 billion. And the possible legalization of cannabis in other countries and export possibilities provides more potential growth to Shopify.
“We are buyers,” Garg writes. “We continue to believe SHOP is a key growth name to own.”
Shopify is up 27 per cent over the past 12 months. The stock has 19 buys, 10 holds, onesell, according to data compiled by Bloomberg.
“We continue to believe SHOP is a key growth name to own.”
MONIKA GARGST ANALYST