Please ensure Javascript is enabled for purposes of website accessibility

Shopify and Stamps.com Rise on Buyout Speculation

By Eric Volkman – Updated Jul 20, 2020 at 3:19PM

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

The difference in sales valuations is compelling enough for Shopify to make a play, according to one stock research site.

Will we soon be buying postage stamps from Shopify (SHOP 0.64%)? Citron Research very much thinks so; it believes the retail tech solutions company will purchase Stamps.com (STMP).

Citron, the often highly critical stock-commentary site, explained its reasoning in a tweet posted Monday morning. "Valuation gap has never been larger. On [forward 12-month] EV/Sales, [Shopify] at 44x vs. [Stamps.com] at 6x and [Stamps.com] is the proven leader in online postage... the essential tool for small biz not owned by [Shopify]," Citron wrote.

A man stuffing a letter in an envelope.

Image source: Getty Images.

In Citron's opinion, such a deal would be a windfall for Stamps.com investors. It believes if Shopify pulls the trigger, an all-stock deal could total $400 per Stamps.com share. If it reaches that level, it would represent a rich premium of roughly 73% on the latter's current stock price.

Citron did not provide any sources for its view that Shopify will move on Stamps.com. Neither company has yet commented on the tweet.

Although Shopify isn't a particularly acquisitive company by the standards of the ambitious and competitive e-commerce industry, it has purchased various assets over the years. These, however, tended to be relatively modest in scale. Last September, for example, it announced it was paying $450 million for 6 River Systems, a little-known warehouse robotics specialist.

By comparison, Stamps.com is a very big fish. At the moment, its market capitalization tops $3.9 billion.

Investors piled into both companies on Monday following the Citron speculation. Shares of Shopify were up by almost 9% and those of Stamps.com rose by over 6% in late afternoon trading, well outpacing the gains of the wider market.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Shopify. The Motley Fool recommends Stamps.com. 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

Stamps.com Inc. Stock Quote
Stamps.com Inc.
STMP
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
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/02/2022.

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.