This Company That Cathie Wood Sees Benefiting From Instagram, TikTok's Commerce Push Has Outperformed Amazon By 300% This Year

Shopify Inc’s SHOP near $80 billion market valuation may be dwarfed by e-commerce giant Amazon.com Inc's AMZN $1.8 trillion but the Canadian company’s stock has fetched bountiful returns for Cathie Wood’s Ark Invest and other investors.

Shopify’s revenue has grown faster than Amazon’s year-to-date as well as over the past five years.

How Shopify And Amazon Stack Up Financially: Shopify, whose core business caters to small merchants online, reported revenue of $2.92 billion in 2020, a jump of nearly 50% on a CAGR basis over the past five years. The company reported a net income of $319.5 million in 2020 but reported losses and deficits in the prior years.

Shopify’s half-yearly revenue grew 78% to $2.11 billion for the six months ended June 30, when compared with a year ago. The boost in revenue came was driven by the boom in the e-commerce sector as more customers went online for shopping during the pandemic.

Shopify has grown its merchant base to 1,749,000 linked to its platform as of December 2020, from 162,000 merchants since it went public in May 2015.

In comparison, Amazon reported net sales of $386 billion in 2020, a jump of 23.2% on a CAGR basis over the past five years. The Jeff Bezos-founded Amazon’s profit has grown by leaps and bounds during the period to $21.33 billion in 2020, a CAGR jump of 55.2% over the past five years.

Amazon’s half-yearly sales have grown 34.8% to $221.59 billion for the period ended June 30. Net income has, however, more than doubled to $15.88 billion during the same period.

Ark’s Take: The New York-based Ark Invest has piled up shares in Shopify and has been selling some of the shares since August, booking profit in the stock as it climbs to new highs. 

The popular investment firm owns 873,234 shares — worth $1.31 billion — in Shopify via three of its active exchange-traded funds. These are the Ark Innovation ETF ARKK, the Ark Next Generation Internet ETF ARKW, and the Ark fintech Innovation ETF ARKF. 

In ARKF — which also counts Square Inc SQ and Coinbase Global Holdings (NASDAQ: COIN, among its top exposures — the stock ranks second in a portfolio of 39 stocks. In ARKW and ARKK, Shopify ranks seventh among a total of 45 stocks and 48 stocks, respectively. 

Since July 30, just after Shopify reported second-quarter earnings, Ark Invest has sold a total of 149,816 shares in the company. 

Wood's remains bullish on Shopify, saying the company will benefit from the "social commerce" push, with companies like TikTok, and Facebook Inc.-owned FB Instagram users relying on it for their e-commerce operations.

Returns Over 5 Years: Shopify shares are up 35.9% so far this year as of Friday's close. The stock is up from $42.92 a share in September 2016 to $1,484.10, a return of 3,477%.

Amazon shares are up about 9% so far this year. The stock is up from $805.75 a share to $3,469.15, a return of 345.61%.