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On the Eve of Earnings, Shopify Files for Massive $7.5 Billion Capital Raise

By Danny Vena – Jul 28, 2020 at 7:45PM

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This will no doubt fuel speculation about a potential acquisition.

After the market close on Tuesday, and on the eve if its earnings release, Shopify (SHOP 0.64%) filed a $7.5 billion mixed shelf registration offering with the Securities and Exchange Commission (SEC), which would give the company the right to sell a variety of securities. 

Shopify listed Class A shares, preferred shares, debt securities, warrants, subscription rights, and units, in its Form F-10 submitted to the SEC. This type of filing allows the company to request the right to issue these securities, though it can wait until a future date to do so.

A man comparing an e-commerce page on a laptop, notebook, and smartphone app.

Image source: Getty Images.

This isn't the first time Shopify has raised capital -- in fact, it has done so nearly every year since going public. With the stock sitting just 5% off its all-time high set earlier this month, it seems like an opportune time to buttress its balance sheet once again.

However, it's the sheer magnitude of the offering that will have tongues wagging. This is by far the largest filing of this type Shopify has made to date. For context, the company made a similar filing with SEC in August of 2018 for $5 billion, so the size of the offering could lead to speculation that Shopify has a purpose in mind for the influx of cash. 

The filing comes just a week after Citron Research posited that Shopify should buy (STMP), a company that provides internet-based mailing and shipping solutions. The timing will surely add fuel to the takeover speculation.

That's not to say that an acquisition is out of the question, though Shopify's previous targets have been quite modest. Late last year, Shopify spent $450 million to acquire 6 River Systems, a leading provider of collaborative warehouse fulfillment solutions. The purchase came just months after the company announced the Shopify Fulfillment Network, a move that was clearly designed to take on (AMZN -1.57%).

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Danny Vena owns shares of Amazon and Shopify. The Motley Fool owns shares of and recommends Amazon and Shopify. The Motley Fool recommends and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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