Please ensure Javascript is enabled for purposes of website accessibility

Is Shopify Stock Headed to $1,000?

By Joe Tenebruso – Jun 18, 2020 at 1:19PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One analyst says yes. Is he right?

Despite its stock's torrid gains in recent years, investors are still underappreciating Shopify's (SHOP 0.64%) growth potential.

So says RBC Capital analyst Mark Mahaney. On Thursday, Mahaney reiterated his outperform rating for Shopify's stock and boosted his target price from $825 to $1,000. Mahaney's new forecast represents potential gains of 16% for investors, compared to Shopify's current price of $860.

A gold bull sculpture.

RBC Capital analyst Mark Mahaney is bullish on Shopify's shares. Image source: Getty images.

Mahaney argues that investors are underestimating the size of Shopify's market opportunity, its ability to earn higher fees on the sales the merchants on its platform generate, and its ability to strengthen its operating margins over time. Thus, Mahaney says Shopify's long-term earnings potential is far higher than many investors expect. 

Will Shopify shares reach $1,000?

Mahaney's arguments are sound.

Shopify has a massive total addressable market. Global retail e-commerce sales will grow to more than $6.5 trillion by 2023, according to Statista, up from $3.5 trillion in 2019. Shopify's platform currently facilitates roughly 6% of U.S. online retail sales and a smaller portion of global e-commerce sales. But it's rapidly gaining share of these enormous markets. And its new partnership with retail titan Walmart should only help to accelerate its growth.

Shopify excels at finding new ways to better serve the merchants that rely on its platform as their e-commerce operating system. As it launches new services, it should be able to generate higher fees on merchants' sales. And as a primarily software-based business, Shopify's profit margins should rise as it scales its operations.

For these reasons, it's likely that many investors are not yet fully appreciating Shopify's true earnings power -- and its stock's potential to ascend to new all-time highs. Thus, reaching $1,000 per share seems not just possible, but probable -- and perhaps sooner than many investors think.

Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Shopify Inc. Stock Quote
Shopify Inc.
SHOP
$26.94 (0.64%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.