Shopify (TSX: SHOP) is the new technological wunderkid of the TSX, following in the footsteps of Nortel, RIM, Valeant Pharmaceuticals and now SHOP. Good for them for achieving a market capitalization of $100 billion – a proud accomplishment to say the least. They deserve it.
The question is whether SHOP will retain its competitive advantage in the future. For now, things are great, but just like what happened to Nortel and Blackberry, you can lose your competitive advantages in technology more quickly than one anticipates, especially if you’re Canadian!
But what got my attention was their secondary offering where they raised US$1.3 billion (selling shares at US$700).
I should charge them for this advice, but I will offer it freely: If you can, raise more equity capital at this price. Like, try to raise $10 billion.
You’ll thank me in five years.