Shopify: IPO Lockup Expiration Provides Shorting Opportunity

Shopify (NYSE: SHOP) – Sell or Short Recommendation – $27 PT

November 23, 2015 concludes the 180-day lockup period on Shopify Inc. .

We previously covered this event on our IPO Insights platform.

At this point, its pre-IPO shareholders, directors and executives will have the chance to sell their >50 million shares. The potential for a sudden increase in stock available in the open market may cause a significant decrease in the price Shopify shares, opening a short opportunity for experienced investors.

Business Summary: Cloud-based Commerce Platform for SMEs

Shopify provides a cloud-based commerce platforms specifically for small to medium-sized businesses. Its platform gives its clients a single view of their business and customers from a variety of sales channels, including tablet, Web and mobile storefronts, social media storefronts, pop-up shops, and brick-and-mortar storefronts. Their software gives merchants the capability to manage products and inventory, build customer relationships, process orders and payments, and utilize analytics and reporting.

The company Shopify on May 21, and the market valued it at $1.27 billion. The interface gives SMEs the capability to easily and quickly launch a fully functional, branded e-commerce site, usually in days rather than weeks or months. Its pro-edition costs only $79 per month.

In June, Shopify announced deals that would allow its merchants to sell products on Facebook (NASDAQ:FB) and Pinterest through their new buy button features. In addition, Shopify announced in September that it had been selected as the preferred migration provider for Amazon (NASDAQ:AMZN) Webstore merchants. Adding to its prospects, Shopify also reported aa with Twitter (NYSE:TWTR), giving its merchants the opportunity to sell products across the popular social media site.

Shopify makes approximately $600 in gross profit annually from each merchant account. The company notes that the cost of acquiring a new merchant through sales and marketing averages around $1,000, making the break-even point over 12 months.