Friday File: Earnings updates from Tech-land, Brooding over Markel, and a note on Royalties

Notes on AAPL, CRTO, SHOP, SWKS, YTRA, MMX.V and more

By Travis Johnson, Stock Gumshoe, August 4, 2017

Things will be a little quiet here at Stock Gumshoe for the next week or so — I’m off to do my big fundraising ride for Dana-Farber tomorrow, and will then be taking several days off to recuperate next week and spend time with family… I’ll be back with the Friday File next week, but there may not be much new in this space until then.

But for now, there’s been lots of news from the earnings world when it comes to my

Real Money Portfolio positions, so I’ll focus on that for your Friday File musings this week…

Shopify (SHOP) had a blowout quarter of growth, again, keeping investment on pace with revenue and no earnings, but the market loves that for now… perhaps because it makes them seem even more Amazon-like?

Even after coming off of those post-earnings highs a little bit, Shopify is a lot more expensive than Amazon (AMZN) on most comparable metrics — it’s tough to really compare the two, since Amazon is really a merchant and Shopify is not (and, of course, SHOP is 2% the size of AMZN), so Amazon has a real and meaningful cost of goods that’s far higher than Shopify’s… but if you take that out of the equation and look at just gross profit (gross profit is just revenue minus the actual cost of the goods/service sold), then AMZN is valued at about 8X gross profit and SHOP is valued at about 25X gross profit.

That’s not really a fair comparison either, and the two companies are really not all that comparable (SHOP’s product is a subscription service for merchants who want to manage their e-commerce, AMZN’s product is a shopping club that comes with free streaming video, plus web services for other companies), but I found it interesting. AMZN has come down slightly of late so is now about 6% off its all-time highs, and SHOP has been hitting a new high each quarter as they grow.

The hope for the future, essentially, is that they have now grown so large that they can really claim ownership of their niche — that’s not technically true yet, there are strong competitors, including some with pretty big venture backing, but building the biggest brand is a big deal, and having a $10 billion market cap gives Shopify a huge market presence and great firepower for pushing out ...

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