BigCommerce, an e-commerce software provider, has filed for an initial public offer at a time when online shopping is booming as many offline stores have been forced to close.
BigCommerce is based in Austin, Texas and was founded in 2003. It competes with Shopify (ticker SHOP), Adobe’s Magento and Salesforce.com’s (CMR] Commerce Cloud. The performance of Shopify shares has influenced the decision to go public, with more than 140% in the first year.
BigCommerce stated in a securities filing that it plans to offer its platform. It claims that it “simplifies the creation beautiful and engaging online shops by providing a unique combination o ease-of-use, enterprise functionality and flexibility.”
According to the company, it had approximately 60,000 online shops in 120 countries as of June 1. Avery Dennison, Ben & Jerry’s and SkullCandy are just a few of the customers.
BigCommerce is a Little Commerce version of Shopify. The company’s revenue in 2019 was $112.1million, an increase of 22% over the previous year. However, the company lost $42.6 million. This is an increase of $38.9 millions from 2018. The March quarter saw revenue rise by 29.7% to $33.2 million. However, the loss of $42.6 million was more than in 2018. This is a decrease from $10.5 million in 2018.
Comparable to
BigCommerce’s latest quarter revenue was approximately 5% less than Shopify’s, and it is growing slower. If you give BigCommerce 4% of Shopify’s market capitalization and you consider it slower growing, then you could get a potential valuation up to $4.6 billion.
If you quadruple the first quarter revenues and increase a little, your revenue for this year is around $150 million. A multiple of 30 times (which is a bit generous but only half the amount of Shopify) gives you a comparable valuation of $4.5 billion.
Morgan Stanley, Jefferies, Barclays and KeyBanc Capital Markets are the underwriters of the IPO. BIGC is the stock symbol of the company and it will trade on Nasdaq.
BigCommerce raised $328.5 million in venture capital. According to PitchBook the company was valued at $514million at its 2018 last round. Revolution Growth, General Catalyst and GGV Capital are some of the investors.
Tobias Lutke, a snowboard enthusiast and programmer, wanted to sell snowboards online. But he ran into a problem. He didn’t have any commercially available software that would help him get started. He built an e-commerce platform that was customizable from scratch and launched his online store called Snowdevil. In 2004, it became clear that the software he had developed was more profitable than selling snowboards. Shopify (SHOP-7.55%) was created.
Since then, the company has made great strides. The platform serves over 1 million merchants, and the total value of goods sold in its most recent quarter was $14.8 billion. Merchants pay $50.7 million per month in subscription fees to access the platform. This helped to drive revenue up 47% over the previous year to $1.07 Billion for the first nine months. The stock has risen 160% in the past year because of these amazing results.
Many investors have benefited from this incredible run by the company. What if you had gotten in at the beginning of the stock’s debut in 2015? What would you have made?
The IPO that launched a skyrocketing stock
Let’s suppose you were part of the initial $17-a share offering. 300 shares would have cost $5,100. Your investment would have gained more than 50% by the end of trading on May 21, 2015. However, selling at this point would have been foolish. Since then, the stock has rocketed to $370 per share. Your initial investment of $5,100 would have been 22 times greater, or $111,000 today. This is enough money to pay for a state-funded university education.
Investors who missed out on the IPO might have felt they were missing the boat. But that was not the case. Let’s suppose you bought the stock during its peak 12 months on the market. It would have been July 30, 2015 at $38.13. This would have bought 133 shares worth approximately $49,000 today. The incredible return of 870% was $5,100. This is even more impressive when compared to the 63% market return over the same period.
To achieve these gains, however, you will need to keep going up.
Sometimes holding can be the most difficult part.
Shopify, a market-beating company, is a great investment opportunity. However it can also lead to a temptation for investors to sell. This is one of my biggest investment mistakes. I have missed out on huge winners by selling stock too early. These are three strategies that will help you keep your stocks for the long-term:
Do not invest in stocks you will need in the next five-years. This will allow you to stay invested and still meet your financial obligations.
Diversify your investments to avoid overinvesting in one stock. This strategy will help you sleep well at night, despite the inevitable market ups and downs.
You should have an emergency fund that is sufficient to cover your investments in case of untoward events.
Shopify stock nearly tripled in value in 2020 as retailers, restaurants, and grocery stores turned towards its software to manage their online businesses, create web storefronts and accept payments. Its market capitalization has exceeded $140 billion. Affirm was founded in 2012 and partners with retailers to offer consumer loan options. Buyers can pay in installments for Dyson vacuum cleaners, Peloton bikes, Oscar de la Renta handbags, or Dyson vacuum cleaners.
Affirm, an online lender, formed a partnership with Shopify in July to provide point-of-sale financing and Shop Pay (Shopify’s checkout service). Shopify received warrants to purchase up to 20.3million shares of Affirm as part of the agreement.
Shopify now has a stake worth approximately $2 billion after Affirm’s Nasdaq debut Wednesday. At the close, Affirm rose 99% to $97.24
Affirm was made the provider of Shopify’s “buy now, and pay later” financing service Shop Pay Installments. This new service, which allows merchants to finance their purchases online, launched in the U.S. late last year.
Affirm stated in its prospectus, that Shopify allowed it to “significantly expand the number merchants and consumers using our platform.” Shopify has more than a million customers and reported in October that the third quarter gross merchandise volume more then doubled over a year ago to $30.9 billion.
Max Levchin, the CEO and founder of Shopify, told CNBC at the time that the two companies will be a “tightly integrated partnership”. This allows merchants to “flip a switch” and have the product live.
Levchin stated in an interview that “we expect massive uptake.” “By making integration so simple, we expect it will be extremely close to total universality.”
Affirm is grateful for Shopify’s merchant diversification. In fact, 30% of Affirm’s revenue was attributed to Peloton in the most recent period.
However, Shopify was denied access to its vast customer base. Affirm granted Shopify the right of buying over 20,000,000 shares for a penny each. 25% of the shares that were issued under the original warrant became vested in July. The IPO vested the remaining 15.2 millions.
Shopify is Affirm’s third largest shareholder. Max Levchin, founder and CEO, owns 11% of Affirm’s shares. This makes him the second-largest shareholder. Jasmine Ventures is part of Singapore’s sovereign wealth fund GIC, which holds 9%.
Lightspeed Venture Partners and Peter Thiel’s Founders Fund are the next top holders. Khosla Ventures is also on the list.
