Shopify (SHOP 1.61%) has been a major laggard over the past year with the e-commerce giant's shares dropping 75% in the trailing-12-month period. The company's financial results suffered as its pandemic-related tailwind came to a screeching halt, and economic issues such as inflation didn't help either. Although the market continues to punish Shopify, the company showed some encouraging signs during its latest quarterly update.

Management seems confident the long-term prospects of the tech giant are intact. Let's look at some encouraging words Shopify's president, Harley Finkelstein, uttered during the company's second-quarter earnings call and what it could mean for investors. 

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Building a solid growth foundation

Net losses and economic problems are just some of the issues Shopify is dealing with. And given these challenges, it isn't too surprising many investors have decided to take their money elsewhere. But as the old proverb goes, what doesn't kill you makes you stronger. Shopify believes it is taking steps that will only strengthen its business and help it set a solid foundation for the future. As Finkelstein said, "We believe we will emerge from 2022 and this macro cycle stronger, and our prospects for long-term growth and profitability remain significant."

There is quite a bit to unpack there. First, why does the company believe it will come out of the current cycle stronger? Here's just one reason: Shopify has been making moves to help its clients -- merchants running online storefronts -- better serve their customers and reach a broader pool of consumers worldwide. Shopify's efforts along these lines include Shopify Markets, a cross-border management tool it launched last year to allow merchants to customize their storefronts to specific geographical regions from a single store.

Shopify continues to go global, too, introducing various tools -- including Shopify Payments and Shopify Shipping -- in countries such as France, Italy, and others during the second quarter.

How will those (and other) initiatives allow Shopify to come out of the current ordeal stronger? There is no question retail spending will increasingly transition to e-commerce avenues. That's why the company's long-term growth prospects are attractive. Estimates vary, but according to some projections, the e-commerce market will be worth over $27 trillion by 2027, compared to $10.4 trillion in 2020. Shopify is helping its merchants benefit from this trend. After all, e-commerce is a global phenomenon.

The ability of its merchants to conduct business worldwide will positively impact Shopify's gross merchandise volume (GMV, the total value of transactions conducted on its platform). That will push Shopify's revenue in the right direction. Finkelstein also mentioned Shopify's "leading position" in the industry. Last year, the company's share of U.S. retail commerce came in at 10.3%, second only to the undisputed leader, Amazon.

What's your investing timeline?

Shopify isn't out of the woods just yet, not as long as we are still dealing with economic (and other) problems. For those looking to make a profit off its stock overnight -- or even over the next year -- I wouldn't recommend buying today. But for people with a much longer investing horizon, say five or more years, Shopify is still a solid pick. Finkelstein is correct that the opportunities ahead remain massive.

And the company has made solid headway within its market already while building a competitive edge in the process. Shopify benefits from high switching costs since the time, energy, and money it takes for its merchants to develop and maintain online storefronts are investments. These merchants will be hesitant to switch platforms. The company can strengthen its hold on its current pool of clients and attract new ones as it continues to add new features and services to conduct business efficiently.

A growing customer base, coupled with an expanding industry and a solid moat will help Shopify deliver market-beating returns in the long run. It is still worthwhile to stick with the company despite its challenges.