Shopify (SHOP) Embraces Fulfillment, PT Jumps to $286 at Piper Jaffray

Piper Jaffray analyst Michael Olson raised the price target on Shopify (NYSE: SHOP) to $286.00 (from $216.00) after the company announced a number of updates to Shopify's platform at the Shopify Unite conference. The most significant takeaway appears to have been the Shopify Fulfillment Network where the company will warehouse and ship orders for merchants. The company intends to spend ~$1B on this initiative over the next five years, but fulfillment solves a merchant pain point and provides another avenue for incremental topline growth making the announcement extremely important as a differentiator.

The company intends to allow merchants to warehouse and ship through Shopify at a cost lower than individual merchants would be able to find on their own. The fulfillment offering will be limited to shipments originating in the U.S., but more than half of company GMV was from U.S. in 2018. In addition to payments, capital and other offerings the company has added in past years, fulfillment will provide merchants with an ability to focus on creating/cultivating products and less time on running the infrastructure of an online store. No change to the Neutral rating but the BP jumps on "tech
peer multiple expansion and ongoing outperformance, as well as product innovation".

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