Guggenheim Surveyed 272 Small Businesses To Better Understand Shopify

Guggenheim surveyed 272 small businesses to better understand Shopify Inc SHOP's positioning within the e-commerce landscape.

The Analyst

Guggenheim's ' Ken Wong maintains a Buy rating on Shopify with an unchanged $180 price target.

The Thesis

Shopify is home to around 770,000 merchants from across the world, which pales in comparison to the approximate 30 million small business in the U.S. alone. Wong said this would explain why just 3 percent of the 272 small businesses the firm surveyed use Shopify to facilitate their online business. Encouragingly, the small exposure implies Shopify's penetration is still low and it has plenty of opportunity to gain market share.

The average Shopify user surveyed generated around $40,000 in gross merchandise volume annually and the Shopify users expect to see a sales growth of 12.4 percent in 2019, the analyst wrote in the note. This figure is "well ahead" of the average growth estimate of 4.5 percent among all businesses surveyed.

The survey also gives confidence in Shopify's platform, which is designed for the "lowest of low" end customers but can at the same time be used by the "highest of highs" in terms of customer needs. The success of larger businesses on the Shopify Plus platform gives the company credibility to its enterprise ambitions.