Shopify (SHOP) Ramps as KeyBanc Speculates on Shop App's Potential Big Referral Fees

Shopify (NYSE: SHOP) is gaining 5.7% in early action Wednesday, which is in part attributed to speculation from KeyBanc analyst Josh Beck that the company could start earning a referral fee from its Shop App, similar to the 15% take rate Amazon gets.

Beck commented, "Shopify has quietly expanded the Shop Pay from a checkout wallet to a consumer facing Shop App that offers package tracking and recommended product browsing. Shop Pay has 60M+ buyers and has facilitated $14B+ of GMV while Shop App has rapidly scaled to 10M MAUs. While monetization details are limited at this early juncture, we see a future where Shopify could earn a referral fee (e.g., Amazon generally charges 15% take rate for many of Shopify’s merchant categories) or TPV take rate via improved conversion. Assuming Shop App is ~20% of TPV (est. 16% in 2019) on ~$50B of TPV every 1% incremental take rate would imply a ~$100M revenue opportunity."

The firm reiterated an Overweight rating and price target of $1,250 on SHOP.

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