Please ensure Javascript is enabled for purposes of website accessibility

Why BigCommerce Stock Is Soaring Today

By Timothy Green - Aug 26, 2020 at 12:18PM

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 Shopify competitor is on fire after announcing an integration with Instagram.

What happened

Shares of BigCommerce (BIGC -0.65%) surged on Wednesday, with the e-commerce software-as-a-service stock apparently still benefiting from recent Facebook-related news. On Tuesday, BigCommerce unveiled an Instagram integration, allowing users of the social media app to buy products directly. The stock soared following that announcement, and it was up another 26% by 11:25 a.m. EDT Wednesday.

So what

Merchants using BigCommerce's platform will now be able to use "checkout on Instagram," which allows them to sell products directly through the Instagram app. This eliminates the need for the potential buyer to click through to a website to complete the order.

The BigCommerce logo.

Image source: BigCommerce.

BigCommerce is a competitor to Shopify, which has seen tremendous growth during the pandemic as businesses pivoted online. Shopify reported a near-doubling of revenue in its second quarter, while gross merchandise value surged by almost 120%.

BigCommerce has yet to report quarterly results following its initial public offering in August, but the company was growing at a less impressive pace earlier this year. BigCommerce reported revenue growth of about 47% in the first quarter, although growth may have accelerated since then. The Instagram integration will further help the cause.

Now what

BigCommerce generated revenue of $112 million in 2019. Following Wednesday's rally, the company is being valued at roughly $8.7 billion. That puts the price-to-sales ratio at an eye-watering 78. The company was unprofitable in 2019 and in the first quarter of 2020.

BigCommerce may have plenty of growth ahead as it competes with Shopify for online merchants in an e-commerce market that has been boosted by the pandemic. But the enthusiasm may be getting a little out of hand.

Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Facebook and 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

BigCommerce Holdings, Inc. Stock Quote
BigCommerce Holdings, Inc.
$19.93 (-0.65%) $0.13

*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
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

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.