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Why Shopify Inc. Stock Jumped 11.5% in April

By Joe Tenebruso – May 12, 2017 at 2:02PM

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Takeover rumors are stoking the e-commerce solutions company's explosive rally so far in 2017.


Shares of Shopify (SHOP -1.30%) leapt 11.5% last month, according to data provided by S&P Global Market Intelligence. The Canadian software maker's incredible ascent continues, as April's gains come after an 18.5% rise in January, a 16.5% gain in February, and a 15% jump in March.

A rising stock price chart

Image source: Getty Images.

So what

Shopify's shares received a boost in mid-April on rumors that eBay (EBAY -1.94%) was considering making a bid for the company.

Such a deal could help to provide a jolt to eBay's somewhat tepid growth rates, as Shopify grew sales at a year over year rate of 75% in the first quarter, compared to only 4% for eBay. Yet as my Foolish colleague Danny Vena notes, eBay has been divesting non-core assets in recent years, such as its PayPal Holdings subsidiary and its stake in Latin American e-commerce giant MercadoLibre, so a deal may be less likely to occur than some investors currently believe.

Now what

Regardless, Shopify's stock is already up another 18% so far in May, fueled by its strong first-quarter results, in which CFO Russ Jones said that Shopify is becoming the "de facto platform for sellers."

If Jones is correct, Shopify -- as the leading provider of cloud-based e-commerce solutions for small and medium-sized businesses -- could be uniquely positioned to benefit from the relentless growth of e-commerce in the years ahead.

As such, the best long-term outcome for Shopify's investors may be for the company to remain independent.

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool owns shares of and recommends eBay, MercadoLibre, PayPal Holdings, and Shopify. The Motley Fool has a disclosure policy.

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