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Here's Why Shopify Is One of My Largest Stock Holdings

By Trevor Jennewine and Matthew Frankel, CFP® – Oct 28, 2021 at 7:13AM

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One of our contributors has a very high opinion of the e-commerce platform provider.

Shopify (SHOP -2.57%) has been a tremendous performer over the past few years, so it's no wonder that it has become a very large position for many investors who bought shares years ago. Fool.com contributor Trevor Jennewine is one of them, and in this Fool Live video clip recorded on Oct. 18, Trevor discusses with colleague Matt Frankel why he still has a positive outlook on Shopify's future. 

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Matt Frankel: This is Shopify, one that I totally missed the boat on. Trevor did not, and he's about to tell you why it is one of his biggest holdings.

Trevor Jennewine: Sure. This was actually the first stock I ever bought years ago. That's primarily the reason that it's one of my largest holdings. I still think there's plenty of room to go. Shopify helps merchants manage an omnichannel business. It provides software that helps them integrate all these different front-ends -- so brick-and-mortar locations, custom websites, online marketplaces, social platforms -- and it pulls all those sales into a single back-end so that they can manage their business from one platform.

Then on top of that, they have a variety of services like payment processing, discounted shipping, financing. They have something in beta right now called Shopify Balance, where they will essentially allow merchants to open a bank account and debit card through their platform. They've really build out this ecosystem, an end-to-end ecosystem for commerce. Whether you're selling brick-and-mortar, whether you're selling online, it simplifies everything.

The reason I haven't sold, is I think Shopify can be a trillion-dollar company someday. I think they have a massive market opportunity. E-commerce is only getting bigger. I think there's some things that maybe some investors overlook. Their digital payments platform, Shop Pay, they recently rolled that off the platform and they're integrating it with Facebook (META -0.25%), Instagram, and [Alphabet subsidiary] (GOOG -1.66%) (GOOGL -1.79%) Google. Even if the merchants on those sites aren't Shopify merchants they're going to be able to accept payments through Shop Pay. They are expanding their payments platform, sort of like MercadoLibre (MELI -1.00%) did with Mercado Pago. I don't know if they'll have the same level of success, but I like to see that.

They're also building out a fulfillment network across the United States, which I think is really going to differentiate them and help their merchants compete more with Amazon (AMZN -1.17%). Although Shopify will be able to provide managed fulfillment services, they're going to be using AI to allocate inventory intelligently, help merchants drive the cost of shipping down, create a better experience for buyers in terms of delivery. I think this company plays into the digital payments e-commerce trend. I think both of those still have a long way to run.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. 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. Trevor Jennewine owns shares of Amazon, MercadoLibre, and Shopify. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Facebook, MercadoLibre, and Shopify. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $1,140 calls on Shopify, short January 2022 $1,940 calls on Amazon, and short January 2023 $1,160 calls on Shopify. The Motley Fool has a disclosure policy.

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