Asmus Puhl Finance Blog

Shopify’s (NYSE:SHOP) 2019 results were even better than already high expectations!

Revenue in the last quarter of 2019 came in at $ 505.2 million which means a growth rate of 47% accelerating from the 45% growth in Q3 2019.

The real big growth driver was the segment „merchant solutions“ (payment processing, transactions etc.) growing 53% yoy.

Gross merchandise volume, the volume of all merchandise sold over Shopify’s platform for 2019 reached $61.1 billion, an increase of 49% over 2018.

Operating loss on a GAAP basis for 2019 was $141.1 million, or 9% of revenue, versus $91.9 million, or 9% of revenue, for 2018. This reflects the cost of heavy investments into new offerings for their merchants, p.e. Shopify launched „Shopify Fulfillment Network“ a new logistics offering for their merchants.

By year end 2019, already 29% of Shopify’s merchants were based outside the core geographies of the US and Canada, compared with 24% in these largely non-English-speaking markets in 2018.

Shopify now starts to expand internationally which soon could mean another growth driver for the company.

The company announced that 2020 will be another year of heavy investments.

So don’t expect Shopify to be bottom line positive any time soon. But we believe these investments will pay off rather soon.

For 2020 the company expects revenues in the range of $2.130 billion to $2.160 billion an increase of 35% compared to the 2019 revenue of $1.578 billion

Consider this estimate „conservative“! Shopify will rather exceed that goal.

At yesterday’s closing price of $532.97 and a market capitalization of $ 61.75 billion Shopify is valued at a 2020 price/sales ratio of 29! This looks expensive but in our view is more than justified by future growth possibilities this company has.

Even after the tremendous runup we consider this stock a „buy“!

Shopify released very impressing FY 2019 results which we will discuss later!

As a starter just a look at the share price appreciation:

Since this blog started to recomend Shopify Inc. (NYSE: SHOP) the 19th Sep. 2019 the stock is up 63% compared to the advance of the S&P 500 of less than 12% over the same time period.

Shopify’s stock gained 187% in 2019 and 31,4% year to date until yesterday’s close at $ 531.25!

Stay tuned, this story is far from over!

Markel Corp. (NYSE:MKL) yesterday reported FY 2019 results! What a tremendous year that was!

Markel reported an 40% increase of operating revenue from $6.8 billion in 2018 to $9.5 billion in 2019.
Diluted net income per share was $129.07 for the year ended December31, 2019 compared to diluted net loss per share of $9.55 in 2018.

Comprehensive income which includes book value gains and losses from investments made a big jump to $2.1 billion 2019 compared to a comprehensive loss to shareholders of $375.8 million in 2018.

The combined ratio was 94% in 2019 compared to 98% in 2018 thanks to less catastrophic losses from the hurricanes in 2018.

Book value per common share outstanding the all important metric in the insurance industry, was $802.59 at December31, 2019 compared to $653.85 at December31, 2018.

Thomas Gaynor and Richard Whitt, the co-chief executive officers described 2019 as a record-setting year for Markel:

“Gross written premiums from our underwriting operations surpassed $6 billion and within our Markel Ventures operations, revenues surpassed $2 billion”

“Gains on our investment portfolio were just under $2 billion, driving record comprehensive income and book value per share.”

The tremendous runup of the stock market in 2019 clearly made these results possible.

Not surprisingly Markel’ stock jumped 5.6% on that news at yesterday’s closing!

Markel is now valued at a price/book ratio of 1.6 which is certainly “fully valued”. Markel is a „buy“ but only with a time horizon not under 5 years.