How To Buy Shopify Stock
Welcome to Trading Brokers step by step guide to buying Shopify stock. Here you will find an easy to understand explanation of trading Shopify stock. This includes how to buy Shopify shares online, what you need to trade Shopify stock and how to open a trading account with a stock broker so that you can buy Shopify stock online today.
Maybe you have heard of buying Shopify stock online or through a friend. Perhaps you are looking to trade and are curious about the different options available to you. Whether you are looking to speculate, invest or just learn more, this guide on how to buy Shopify stock can help you along your journey.
Shopify is a Canadian e-commerce company founded in 2006. What are the factors that move its stock?
Overview of Shopify
That the world is fast becoming a global village is an understatement. Small physical businesses are fast switching online, and “Drop shipping” is the new rave. Businesses are leveraging the internet to reach more customers, continents away. To be able to do this, they need a lot of resources. One company trying to provide those resources is Shopify. In fact, doing drop shipping is gradually becoming synonymous with “doing Shopify.”
Shopify Inc. is a multinational e-commerce company, with several thousands of merchants in 175 countries and counting. It started after the founders – Tobias Lutke, Daniel Weinand, and Scott Lake – attempted to build an online store but were disappointed as to the existing e-commerce ecosystem available at that time. Launched in 2006, the company is based in Ottawa, Ontario, Canada, and employs over 5,000 people.
Today, Shopify is an online service that facilitates e-commerce by allowing people to set up websites for their online stores. With Shopify, you can create a “digital storefront” that helps your store visitors to navigate through the items in the store, add things you desire to buy to cart and make payments.
Shopify is not a website that sells stuff online like Amazon or eBay. Instead, it is a feature add-on through which online entrepreneurs can sell their products. Alternatively – and this is fast becoming the more popular option – rather than build a website and add-on Shopify, you can directly set up everything on Shopify.
By so doing, Shopify gives you your own unique voice and lets you create a brand. This is unlike other e-commerce models like that operated by Amazon (specifically the Fulfilment by Amazon (FBA) programme), where you are selling on Amazon’s website – not yours – and the branding of your products is that of Amazon, not yours.
Shopify received a massive boost in 2015 when Amazon shut down its competitor service, Amazon Webstore, and specifically recommended Shopify as a replacement service. Shopify has long gone beyond being an API provider to providing a mobile app from where store owners can manage their stores. In addition to website creation, other features you get on Shopify include inventory management and customer support.
It has also gone on to introduce many more features to make it possible for online entrepreneurs to do business more efficiently. The company launched Shopify Payments to help sellers receive card payments without a need for third-party gateways.
Also, understanding the fact that not only small businesses sell online, the company introduced Shopify Plus to enable larger businesses sell online, with enhanced support and added features.
It has also introduced Shopify Capital that helps small businesses access loans with minimal paperwork and no need for credit checks.
How Shopify Makes Money
Shopify makes money through many channels:
- Subscriptions: Ranging from $29 to $299 monthly (and more for the “Shopify Plus” subscribers), Shopify makes money by charging users for listing their sites on its platform.
- Merchant Solutions: Additional services offered by Shopify. These include transaction fees, charges for payments made via Shopify Payments, Shopify Capital, Shopify Shipping, and others.
What Moves Shopify Stock?
Shopify Inc. was listed in May 2015 simultaneously on the Toronto and New York exchanges under the ticker, SHOP. The company has gone through massive price increases over the years, but in those to come, the below-discussed factors have the highest tendency to move its stock price.
E-commerce has come to stay. Many people are beginning to create businesses “around their passions” and leveraging the internet to reach more customers. Even existing brick-and-mortar businesses are making massive pivot towards online selling. Global e-commerce sales are expected to reach over $24 trillion, at a CAGR of 11%. This leaves so much room for growth.
Fast and Exponential Growth
Shopify has grown at a fast pace, especially since its IPO. It can easily rank as the second-largest e-commerce company. The company has over a million merchants selling via its platform. This has reflected in the numbers. The average revenue growth rate for 5 years was 95%, and gross merchandise volume (GMV) has grown at almost the same rate.
The company has gone beyond merely being a platform for small businesses to enlisting large brands like Hallmark, Heinz, Lindt, and others. These are critical to the company’s longer-term sustenance.
Balanced Business Model
Shopify has moved beyond relying on one revenue source to multiple income sources via better value propositions. In the past, subscriptions revenue used to account for the most percentage. However, other sources such as inventory management, shipping, payments and loans are consistently becoming integral revenue generators.
Despite Shopify’s exponential rise, there are still opportunities for even more growth. Shopify’s revenue is forecast to grow at an impressive rate of 34% per year over the next 3 years (2021). There are at least 28 million small businesses in the US, many of which will be looking to come online to expand their reach, and there are even tens of millions more outside the US. The company is expanding offline through its fulfilment service, the Shopify Fulfilment Network, where it will make use of autonomous warehouse robots.
There is Shopify shipping that ensures faster and cheaper deliveries in specific countries but expanding to others. There are always new feature releases. For instance, it is integrating with social media via Facebook Shop. The combination of all these new services and features will further cement its place as a crucial – or even indispensable – e-commerce service provider.
Competition is always a concern for all forms of businesses, and it is for Shopify as well.
For instance, there are general and special purpose server providers like Weebly and Wix as well as WooCommerce and BigCommerce. Although Shopify seems to stand tall amongst them, it still has to watch out. For one, some of these services are free.
Before you invest in Shopify
Shopify is that stock that still has a lot of growth potential. Apart from the pandemic-induced shift to online and virtual activities, businesses are seeing the need to sell online. Shopify is usually the go-to choice.
Investing in Shopify
Investing in Shopify stock is when you buy Shopify shares to own them outright, usually with a view to holding them for the long term. Investors would usually look to buy Shopify stock in order to try and make a profit when the Shopify stock price increases in value.
Trading Shopify stock
Trading Shopify stock is when a trader speculates on the movement in the Shopify stock price without actually owning the shares in Shopify. Traders tend to buy and sell Shopify stock on a more frequent basis, usually speculating on daily, weekly or monthly price fluctuations.
You can buy and sell Shopify stock online through various methods including spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).
One of the most popular ways to trade Shopify stock is via CFDs (contracts for differences). When trading Shopify CFDs, you do not actually invest in Shopify shares, meaning you are not tied to them. You are only speculating on the rise or fall of the Shopify stock price. A CFD is a financial contract, typically between a broker and a trader, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade.
A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with their own personal objectives. Traders would open long (buy) positions, if they think the stock price of Shopify will rise or short (sell) positions if they thought that the Shopify stock price will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.
For example, if you think Shopify shares are going to increase in price, you could buy a share CFD on the company. You will exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares increase in price and making a loss if they decrease in price.
On the contrary, if you think Shopify shares are going to decrease in price, you could sell a share CFD on the company. You will still exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares decrease in price and making a loss if they increase in price.
Futures contracts are an agreement to buy or sell a specified asset at a certain date and price. Shopify investors can use futures trading to speculate on the price movement of Shopify stock in order to try and make a profit. Traders would look to go long (buy) a futures contract if they believe the price will rise or short (sell) a futures contract if they believe the price will fall. The difference in price between the price at the start and expiry date of the futures contract is the profit or loss from the contract.
Shopify spread betting
Spread betting is a financial derivative that enables traders to speculate on Shopify stock falling or rising without taking ownership of the underlying asset. If the trader makes a correct prediction and the asset does move in that direction, they could make a profit, minus any broker fees. On the other hand, if the price moves against their prediction, they would incur a loss.
Financial spread betting is similar in ways to CFD trading except that you are betting a fixed amount per point on the Shopify stock price movement (either up or down) and then pay or receive the difference between the opening and closing price of the bet.
Shopify options are financial instruments that are derivatives based on the value of Shopify’s stock. Traders usually enter into calls when they expect the price of the underlying asset to increase, and puts when they expect the price to decrease. Option contracts come with an expiration date before which the holder needs to exercise their option to buy or sell an underlying asset at an agreed-upon price. The stated price on an option is known as the strike price.
Buyers can choose to exercise their calls and puts or not whereas sellers are obligated according to the buyer decision. Therefore, the sellers (writers) can be exposed to more risk than buyers whose losses can be limited to the premium paid for the contract in the instance they do not exercise the contract. On the other hand, sellers could lose more depending on the Shopify market price.
Exchange Traded Funds (ETFs) enable traders to invest in a basket of securities that trade intraday like individual stocks on an exchange, and are typically designed to track the performance of an existing market or group of markets.
Each ETF is usually focused on a specific sector, asset class, or category. ETFs can be commonly used to help diversify an investment portfolio and create a mini-portfolio, or, for the active trader, they can be used to try and take advantage of price movements.
Shopify is included in various ETF’s with shares in the U.S. ETF market. Traders who are interested in trading other companies alongside Shopify, may consider ETFs.
Where to buy Shopify stock?
Stock trades are processed via a stock exchange, where a stock broker represents each investor. The majority of investors will nowadays use an online stock broker to buy and sell stocks through a stock trading platform which will enable them to connect to the stock exchange. You can see a selection of our best stock brokers below with whom you can open an account to trade stocks online.
ASIC, BVI, CBI, FFAJ, FSA, FSCA
Min $100 Deposit
FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF
Min $250 Deposit
ASIC, FCA, DFSA, SCB, CySEC, BaFin, CMA
Min $200 Deposit
ASIC, CySEC, IFSC, DFSA
Min $5 Deposit
Why trade Shopify stock?
Trading the stock market has become a popular investment activity for many people, especially with the technology that we have these days making it more accessible than ever. There are a vast number of trading brokers, trading platforms and trading apps available for buying and selling Shopify stock with relative ease. The cost involved to get started makes trading Shopify stock accessible to traders of all experience levels from across the globe.
The availability of leverage has also contributed towards the increase in aspiring traders. Leverage allows traders to hold a position size greater than they would have been able to without it. E.g. An account balance of $1,000, could take a position size of $5,000 with 1:5 leverage. Whilst this can increase potential profits, it also greatly increases risk. It is therefore of the upmost importance that you have a clear understanding of the significant risks involved with online trading, especially when using leveraged positions.
The majority of traders would look to buy and sell Shopify stock to try and earn profit from the variation in Shopify’s stock price. When trading Shopify CFDs you can speculate long and short on prices rising or falling without actually needing to invest in Shopify shares. This can make it a more convenient trading method for anyone who has a trading account with an online broker. Alternatively, long term investors may purchase traditional shares in Shopify’s stock for a more long-term hold.
Buying Shopify stock can also be a way to diversify a trading portfolio and to hedge against shares in other stocks or investments in other asset classes such as forex, commodities, precious metals and cryptocurrencies.
However, before investing in Shopify, it is important you understand the dynamics that affect the Shopify stock price.
How to trade Shopify stock online?
If you have taken the time to read through the above, you should hopefully have an understanding of how to trade Shopify stock online. Here is a summary of the key steps:
1. Decide if trading Shopify stock is for you
Trading Shopify stock online carries an element of risk and can take more time than other forms of investing. You will need to research the company, manage your positions, follow market news and decide how to react to it. It is important to understand the risks and dedication that comes with trading Shopify stock online.
2. Educate yourself
Before trading Shopify stock, it is imperative to learn as much as possible about investing and trading online. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many online brokers that can help you to improve your trading skills and knowledge.
Most brokerages will also provide a free demo trading account so that you can practice trading Shopify stock online with virtual funds in order to familiarise yourself with the trading platforms and practice your trading strategies until you feel confident enough to open a real trading account.
3. Choose a Shopify stock broker
In order to trade Shopify stock online, you will need a broker account and trading platform to execute your trade positions through to the market. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.
If you do not have the time to research brokers, you can see a list of our best brokers that we have already prepared to help traders. If you would like to know more, you can also view our detailed guide on how to choose a trading broker.
4. Research Shopify
If you have made it this far then you may be ready to start trading Shopify stock online! The next step is to research Shopify to help increase your knowledge in the company. The best brokers should have this information conveniently displayed for you within their trading platform.
5. Have a trading plan
Some of the most important factors that can help determine Shopify stock trading performance can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.
6. Buy and sell Shopify stock
Once you feel ready to trade Shopify stock online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on Shopify, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of Shopify trades for the long-term, whereas traders may buy and sell Shopify stock on a daily basis.
Is trading Shopify stock right for me?
Trading Shopify stock is a popular choice for long-term investors and active traders. It can be suitable for scalping, day trading and swing trading. Traders who would usually trade forex, trade indices, trade commodities, trade cryptocurrency, may look to diversify their portfolio.
However, it is important to understand the significant risks involved with trading Shopify stock online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade Shopify stock and using trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most stock brokers provide unlimited demo accounts free of charge.
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