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Friday File: Earningspalooza Part Two

Checking up on NAK, MPW, OHI, DOC, CRTO, AAPL, QCOM, FB, SHOP and more...

Lots of news on companies in my Real Money Portfolio this week, so I’ll try to keep it fairly brief and share my updated thoughts on a bunch of them. Here goes!

Shopify (SHOP), the e-commerce service provider that has been so aggressively pushed by the Motley Fool over the past year, released another fantastic ‘beat and raise’ quarter. That was enough to pop the shares up a bit, as the company continues to execute nicely on signing up new merchants (with a record number of new shops added to Shopify again this quarter), and upgrading those merchants to Shopify Payments (including in-store payments, they just introduced a card reader) and Shopify Shipping and Shopify Capital for financing inventory and such (you need to use Shopify Payments to be eligible to apply for Shopify Capital, so it’s a nice little virtuous circle).

The valuation is still silly, of course, because they are very much focused on building the business, not taking money out of it. They still have employee stock compensation that’s crazy high relative to revenues. They still don’t intend to streamline and cut costs to achieve profitability at this point (they’re actually hiring like crazy and building new offices), as they proceed on their founder’s vision of making it easy for anyone to be a retailer, which is why the Fool and others liken Shopify to a young Amazon (not because the business models are the same, but because they are proceeding to grow their platform rapidly based on a singular vision, and without regard to current profitability).

Still, the financials are fine — they are going to keep losing money, but it will still be just in the range of $14-18 million for the year (off of revenue of $615-630 million)… and thanks to their big capital raise a year or so ago, they have plenty of cash (almost $400 million) to keep funding this growth for a long time without worrying about current profitability. That stops working when the market stops having faith in them, of course, which would happen if they started losing retailers, or if the gross merchandise volume at their customers fell, but I see relatively little risk of that at the moment.

Until then, and without a major shakeup in the broader market, SHOP will just keep trucking along — they’ll go up when their earnings beat expectations and ...

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