1 Glowing E-Commerce Stock With Massive Opportunity Still Ahead

Shopify's (SHOP 0.23%) stock is down substantially from its November 2021 high, but it still has plenty of upside. In this clip from "The Rank" on Motley Fool Live, recorded on June 6, Fool.com contributors Matt Frankel and Jason Hall discuss what gives the company and investors confidence going forward. 

Matt Frankel: Shopify, their mission is to democratize and enable e-commerce for every business from the big fish to the small mom-and-pops merchants.

Jason Hall: Arming the rebels.

Frankel: Arming the rebels if you will. But there's a lot of big brands that rely on Shopify. I want to say Heinz (KHC 1.80%) is one of the ones that is.

Hall: Heineken (HEINY 1.21%) is another big one.

Frankel: Heineken. Some businesses have grown from the start-up Phase 2 publicly traded companies. FIGS (FIGS 1.48%) is one that recently went public. One of my favorite apparel companies grew from nothing on Shopify and now is still on Shopify, as a big publicly traded business. My wife is a nurse. There's not a week that goes by that a FIGS package doesn't show up at my house and that was enabled by Shopify.

Shopify has plans ranging from nine dollars a month to $2,000 and up depending on the needs of a business. The reason I bring up the price is because they are designed to scale with their customers like FIGS. I'm sure FIGS wasn't paying Shopify $2,000 a month when they first started out on the platform, but they probably are now.

As their customers are more and more successful, those monthly subscription fees and the more services they add, the revenue goes up on a per-customer basis. Shopify not only sets up online stores, they have payment services, they have marketing services, they have digital advertising services. They have pretty much everything a merchant would need to be successful selling online. A lot of these are add-on services that are additional revenue generators.

Shopify is not a cheap stock. It's definitely cheaper than it once was, but it's not cheap on a price-to-sales basis or anything like that. But a massive market opportunity, e-commerce disruption is still in its early phases in my opinion. Less than 15% of U.S. retail sales are e-commerce. That percentage is even lower in a lot of key markets around the world where Shopify could potentially have an impact.

They estimate their total addressable market including large companies, small and medium-sized businesses, and entrepreneurs to be about $160 billion in revenue. They currently have I think less than 1% on a trailing 12-month basis. I could be wrong on that number. But they have a very small percentage of their addressable market and growing fast.

Recession fears are a big concern right now. Concerns that a lot of entrepreneurs might fail if the economy takes a dive, things like that. I think the fears are overblown with the stock about 80% off its highs. I had said for about two years during 2020 and 2021, that Shopify was one that got away that I should have invested in earlier. I view this as my second chance and it's one that I plan to add and here's just some of their brands to the big companies that use them.

Mentioned Heinz, Jason mentioned Heineken. Molson Coors (TAP.A -0.44%) (TAP 0.55%), apparently beer companies like them. Staples is one. HelloFresh (HLFF.F 8.27%) if you ever had a HelloFresh get delivered to your house, that's a Shopify brand. Lord and Taylor, the big, well-established department store company. There's a lot of big brands to rely on them and a lot of small and medium-sized businesses that will hopefully one day grow into the larger brands that rely on them. That is Shopify our No. 1 that we all enjoyed.