Last May marked the 10th anniversary of Shopify's (SHOP -0.84%) IPO. Its e-commerce platform has emerged as an industry leader, with its ease of use, rapid transactions, and extensive ecosystem. As a result, more merchants continue to turn to its platform to sell their goods.
Fortunately, such benefits have extended to shareholders. Those investors who bought $10,000 of Shopify stock 10 years ago, or three months after its launch, are likely happy with their returns.
Image source: Getty Images.
Shopify over the last 10 years
Over the last 10 years, a $10,000 investment became worth just over $492,000.
This is noteworthy since Shopify has a relatively narrow competitive moat, at least at first glance. When choosing e-commerce platforms, merchants have numerous choices and can also turn to Amazon (NASDAQ: AMZN) if they don't desire the independence from large sellers that Shopify offers.
However, Shopify offers a no-code platform that doesn't require merchants to hire IT staff to build a sales site, and the speed of its platform makes it less likely for merchants to lose sales due to slow speeds. An ecosystem with numerous ancillary services and an increasingly AI-driven focus have also bolstered Shopify's competitive advantage.
Admittedly, the growth did not come without challenges. Investors sold off the stock in the 2022 bear market after the pandemic-driven increase in online shopping ran its course. Moreover, a misstep into the fulfillment business temporarily turned Shopify back to net losses.
Nonetheless, Shopify has become the most popular e-commerce platform in the U.S. and one of the leading e-commerce ecosystems globally. Additionally, Grand View Research projects a compound annual growth rate (CAGR) of 19% through 2030. That will bring the e-commerce market size to an estimated $83 trillion by 2030.
In comparison, Shopify reported a gross merchandise volume of $327 billion over the last 12 months compared to $259 billion over the previous 12-month period, a 26% increase. With Shopify claiming only a tiny percentage of this fast-growing market, investors should not expect the long-term gains to stop anytime soon.
