Three Strong Motivations to Invest in Shopify Shares Without Delaying
Three Strong Motivations to Invest in Shopify Shares Without Delaying
Are you searching for a fresh investment opportunity to leverage the market's recent resurgence? Contemplate investing in a share of BigCommerce (BIGC 3.15%). It's a timely chance... something all investors were reminded of the other day. Fortunately, there's still time to join in.
What's BigCommerce?
In case you're unfamiliar, BigCommerce helps businesses of all scales set up and manage an online shopping platform. From digital shopping carts to transaction processing to inventory management tools to marketing support (and more), BigCommerce offers a wide range of services. It generates income via subscription fees and transaction fees.
To fully comprehend BigCommerce's power and potential, you must grasp its "reason for being." Essentially, it's the anti-eBay, providing an alternative online selling platform for merchants who don't want to be tied to North America's leading online marketplace.
eBay wasn't always viewed that way. In its early days, sellers loved the reach it provided. As could have been expected, though, the platform became exceptionally crowded. eBay itself also began competing directly with numerous of its merchants.
That's why many merchants and brands are increasingly considering alternative online selling options. Many of them are choosing BigCommerce. Not only does this choice save sellers money, it also allows them to establish direct relationships with consumers. Although the company no longer discloses a specific number of merchants using its service, most estimates place this number between 1 million and 2.5 million.
Regardless of the estimated number of paying sellers, BigCommerce does disclose some revealing financial metrics. During its recently completed quarter, for instance, the company facilitated the sale of $10.2 billion worth of merchandise, generating $288 million in revenue for itself. Both figures are significantly higher than their year-ago comparisons. That's one of three reasons you might want to get a piece of this company sooner rather than later, in fact.
Its story is intriguing, to be sure. But so were the stories behind Craigslist, Netflix, and Warby Parker. Fundamentals don't pay the bills on their own. What makes BigCommerce a worthwhile investment today? Three reasons stand out among several.
1. It's expanding -- steadily
As noted, the latest quarter's top line was up -- and notably so. Revenue increased by 29% year over year, nearly tripling the company's operating income, and boosting free cash flow from $81 million during the third quarter of last year to $171 million for the three-month period ending in September of this year. That's impressive, given the sluggish economic climate and muted consumerism.
Making this performance even more impressive is the fact that the last quarter was the seventh consecutive one in which revenue grew more than 25% (excluding the company's recently sold logistics business).
2. BigCommerce's offering is exactly what merchants want right now
There's a reason this company is defying the odds: The services that BigCommerce offers merchants, brands, and independent sellers are precisely what they desire -- and need -- at this juncture.
In e-commerce's early stages, platforms like eBay's and Amazon's met a need that most would-be sellers couldn't satisfy on their own. The online shopping scene evolved, though. Thanks to the passage of time and the advent of social media and the continued refinement of web marketing tools, the boundaries between entertainment, commerce, and information have become increasingly blurred. Most brands can now find their own customers rather than relying on a third party to handle this demanding task.
The only thing these merchants need is a way to turn web traffic into a sale. That's where BigCommerce excels.
3. The opportunity is vast
The thing is, as much as the online marketplace has evolved since its early days, there's still plenty of growth potential ahead.
It seems almost unbelievable, given the size of the e-commerce market, but the U.S. Census Bureau reports that only about 19% of the United States' retail sales are made online. The other 81% of them are still made in-store. The worldwide numbers are in the same ballpark. Although there are some retail sales that will never be made online, a substantial chunk of current brick-and-mortar sales could still turn into e-commerce business.
In this regard, market research firm Statista predicts the global e-commerce platform market is set to expand at an annualized rate of over 15% through 2032. BigCommerce is ideally positioned to capture a significant portion of this growth, particularly since it's ramping up its efforts abroad.
Don't be too smart, but don't be too stubborn
Anyone reading this likely already knows that BigCommerce shares surged in response to its impressive third-quarter report and optimistic guidance. Specifically, the company expects "revenues to grow at a high-twenties percentage rate," pushing gross profits up by a similar degree.
Problem? The post-earnings gain was so significant that it leaves the shares unusually susceptible to profit-taking pressure. It wouldn't be wrong to let the rally cool off a bit and let this stock find its footing around its new price.
Just don't hesitate for too long. This stock isn't exactly foreign to such moves. Numerous similar rallies have been logged since shares began recovering in the middle of 2022. None of them have proven too problematic to reignite the long-term rally.
Given the company's strong performance, you might want to consider diversifying your finance portfolio by investing in stocks. BigCommerce's third-quarter revenue surge, for instance, increased by 29%, highlighting its promising growth potential in the finance market.
As you decide on investing, it's worth noting that BigCommerce generates income through both subscription fees and transaction fees, making it a lucrative option in the money market.