Shopify: Upgrading Moat to Wide, on the Increasing Enterprise Presence

We are upgrading our moat rating for Shopify to wide from narrow, as we think the company used the covid lockdowns to prove its value proposition to all customers, meaningfully improve its solutions, and more firmly cement itself with larger merchants. We now believe Shopify will probably deliver excess returns beyond its cost of capital for the next 20 years. In our opinion, both subscriptions and merchant solutions are wide-moat businesses. Based on increased confidence in our long-term outlook, we are raising our fair value estimate to USD 72 per share, or CAD 99, from USD 68 or CAD 93, leaving shares undervalued, in our view. We continue to believe that Shopify is well-positioned within e-commerce platforms and has a variety of irons in the fire to maintain durable growth.