Investor 58

NASDAQ Bear Market: 2 Growth Dividends Divided into Dividends | Motley Fool

Several companies have announced stock splits this year. While investors were initially excited, these sentiments faded as macroeconomic headwinds hit the market. heavy growth Nasdaq Composite It’s now down 28% from its all-time high, and many popular stocks are down even more.

For example, stock prices Shopify (store 11.12%) And Amazon (AMZN 4.10%) 78% and 41%, respectively. Both companies plan to split their common stock in June, making the share price more affordable for investors. Most importantly, Shopify and Amazon are major players in the multi-billion dollar e-commerce industry, and both stocks are traded at bargain prices.

Here’s what you should know.

Image source: Getty Images.

1. Shopify

Shopify simplifies commerce. Its software helps companies manage sales, orders, and inventory across traditional stores and various digital channels. This includes online marketplaces like Amazon and Walmart, as well as branded websites, mobile apps, and social media. Through its platform, sellers can also access critical services such as payment processing, marketing tools, and small business loans.

In short, Shopify is a comprehensive omnichannel commerce solution, and its software enables companies to grow their own brand across multiple sales channels. This value proposition sets it apart from Amazon, and Shopify has made it the most popular e-commerce software vendor, both in terms of market presence and user satisfaction, according to a G2 Grid report. For context, Shopify powered 10.3% of online retail sales in the US last year, putting it second only to Amazon.

In the first quarter, higher costs slowed revenue growth, and various growth initiatives pressured margins. However, Shopify has continued to gain market share in the US, both online and offline, and its financial performance over the past two years remains impressive.

Measurement

first quarter 2020

First Quarter 2022

compound annual growth rate

Revenue (TTM)

$1.7 billion

$4.8 billion

67%

net income (TTM)

($132.1 million)

$181.8 billion

Unavailable

Source: YCharts. TTM = 12 months plus. CAGR = compound annual growth rate.

Looking ahead, management puts its market opportunity at $160 billion, and the company is implementing a potentially game-changing growth strategy.

Shopify recently announced a $2.1 billion deal to acquire Deliverr. This move will accelerate its ambitions to democratize loyalty to merchants. Deliverr already provides fulfillment and logistics services to sellers on Amazon, Walmart, and many other popular platforms. And its network of warehouses and last-mile partners will allow businesses powered by Shopify to offer two- or next-day delivery to consumers across the US

As a final thought, CEO Tobias Lütke recently bought $10 million in Shopify stock, and other executives have taken similar steps. This strongly indicates that Lütke and his team believe the work will be of greater value in the future. And with the shares trading at 9.5x sales – their lowest valuation in five years – now seems like a great time to buy this growth stock.

2. Amazon

Amazon operates the world’s most visited e-commerce marketplace. In 2021, its platform powered 41% of online retail sales in the United States To enhance this advantage, the company has continued to develop its logistics infrastructure in recent years, enhancing its ability to control shipping costs and delivery times. In fact, Amazon already has redundant capacity in the fulfillment and transportation network, according to CFO Brian Olsavsky.

To take advantage of this, the company recently announced Buy with Prime, a service that extends the benefits of its Prime membership program to third-party websites. This means that select sellers will be able to use Amazon Fulfillment even for products that are not sold on the Amazon Marketplace.

Amazon’s latest earnings report has confused Wall Street. The company posted its first quarterly loss since 2015. But the investors who cashed in were missing some important details. Its cloud computing business – Amazon Web Services (AWS) – captured a 33% market share in the first quarter, overtaking the number two Microsoft Azure by 12 percentage points. Financially, AWS revenue growth accelerated to 37%, and operating margin expanded 450 basis points to 35.3%. This makes AWS much more profitable than Amazon’s retail business.

To that end, Amazon’s net profit has grown faster than the top streak over the past two years.

Measurement

first quarter 2020

First Quarter 2022

compound annual growth rate

Revenue (TTM)

$296.3 billion

$477.8 billion

27%

net income (TTM)

10.6 billion dollars

$21.4 billion

42%

Source: YCharts. TTM = 12 months plus. CAGR = compound annual growth rate.

Amazon also gained a spot in digital advertising last year. It accounted for 11.6% of digital ad spending in the US, up from 10.3% in 2020. This number is expected to reach 14.6% by 2023, according to eMarketer. Even better, digital advertising usually offers much higher profit margins than retail. This means that Amazon’s profitability should continue to accelerate as cloud computing and digital advertising sales grow.

Here’s the big picture: Amazon has a strong presence in three important industries, which leaves plenty of room for growth in the future. And with the stock trading at 2.3 times sales – its cheapest valuation in the past five years – you’ll probably regret not buying this growth stock when it’s down.



2022-05-13 13:30:42

Leave a Comment

Your email address will not be published. Required fields are marked *