Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Canada’s most-awarded
newsroom for a reason
Stay informed for a
lot less, cancel anytime
“Exemplary reporting on
COVID-19” – Herman L
per week
for 24 weeks
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Shopify Inc. passed Royal Bank of Canada as the country’s most valuable company on Wednesday after the Ottawa retail software provider posted stronger-than-expected first-quarter results, joining other e-commerce giants that have had a similar lift as shoppers do more buying online during the pandemic.

Shopify, whose platform is used by more than one million merchants to sell products online and in stores, saw its market capitalization top $121.2-billion on Wednesday, passing RBC at $120.5-billion. The shares rose 6.9 per cent after the company posted US$470-million in revenue in the quarter ended March 31, up 47 per cent from the same period a year ago and well above analyst expectations.

Shopify surpasses RBC as Canada’s most valued stock. Should investors worry?

Whether Shopify can hold its position as Canada’s most valuable company is an open question, however, as some analysts have cautioned the stock may have gotten ahead of itself, particularly as a sharp increase in unemployment fosters uncertainty on longer-term prospects for consumer spending. The company, which has beat earnings expectations every quarter since going public in 2015, pulled its financial guidance a month ago and executives remained tight-lipped about forecasts Wednesday.

Story continues below advertisement

“Our view is … it’s really hard to make money” when the stock is already trading at between 25 and 30 times expected 2021 revenues, Canaccord Genuity analyst David Hynes wrote earlier this week, after downgrading his rating on the stock to hold from buy.

Following the earning release on Wednesday, he wrote “this is an exceptional company; we’d simply like to buy the stock cheaper” than at current levels, which he said have already priced in a growth rate he believes will be hard to maintain.

Shopify’s exceptional growth in business volume did not mean soaring profits, with Shopify posting a net loss of US$31.4-million, or 27 U.S. cents a share in the first quarter, compared with a loss of US$24.2-million in the same quarter last year. Similar to many other large technology companies, Shopify has been less focused on generating bottom-line returns as it continues to invest in top-line growth.

Analysts focused on the company’s adjusted operating loss, which came in at US$7.3-million, better than expectations of an operating loss near US$30-million.

Shopify’s leaders cautioned Wednesday the company continues to face near-term uncertainty because of the widespread economic damage that will affect its merchant customers. But they said the business is well-suited to handle shifting retail buying and selling trends over the long term brought on by the crisis.

“We want to be very realistic, but one thing that’s absolutely true is that Shopify, the product, fits better into the world that’s going to be emergent after the crisis is over…than before,” said chief executive Tobi Lutke on a conference call with analysts.

The market had widely expected a pickup in the company’s key financial numbers, following similar reports from e-commerce bellwethers Inc. and eBay Inc., and Shopify partner ShipHero LLC.

Story continues below advertisement

The U.S. Department of Commerce reported that the year-over-year pace of online retail sales accelerated to a 12-per-cent increase in April from 9 per cent in March. In mid-April, Shopify chief technology officer Jean-Michel Lemieux tweeted that Shopify ‘is “now handling Black Friday level traffic every day.”

However, chief operating officer Harley Finkelstein cautioned Wednesday: ”This shock to the economy was so sudden that patterns in March and April may not be predictive of the rest of the year.”

The shift to online shopping has helped lift Shopify’s stock this year by more than 70 per cent even before Wednesday’s gain. To put that increase in perspective, the amount by which Shopify’s value has increased since Dec. 31 exceeds Bank of Montreal’s total market valuation.

Shopify’s chief financial officer Amy Shapero said positive developments in the business “are far outweighing” the impact of challenges. Those challenges include a 71-per-cent drop in volumes through its point-of-sale channels between March 13 and April 24, and moves by an undisclosed number of customers of its higher-priced Shopify Plus platform to switch to cheaper options.

But the company, which has US$2.36-billion in cash and liquid securities and no debt, is well positioned to benefit regardless of the shape of the economic recovery, she said.

Mr. Finkelstein noted several new, large customers had set up Shopify stores since the pandemic to sell directly to consumers, including chocolate maker Lindt, food giant Kraft Heinz Co. and Canadian grocers Loblaw Cos. Ltd. and Empire Co. Ltd.'s Farm Boy. “This pandemic is forcing all kinds of merchants to rethink how they sell things, he said. “We think that will continue.”

Story continues below advertisement

Shopify has also rolled out a number of initiatives to help merchants get through the crisis, including new features on its platform to facilitate curbside pickup and delivery options for physical retailers, offering a 90-day-free trial for new merchants, gift card offerings for merchants to sell to their customers and expanding the availability of cash advances to merchants. Mr. Lutke said Shopify was focusing on rapidly shipping versions of software that may be below the company’s normal minimum acceptable standards to get helpful tools into the hands of customers as quickly as possible, and later fixing them with upgrades.

Raymond James analyst Brian Peterson said in a note Shopify’s quarterly report “confirms the recent bullish narrative” that COVID-19 has helped improve its results.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies