Billionaire investors are always looking for the next “big thing”. Whether it is a promising growth stock or a well-known AI stock like Nvidia Corp. (NASDAQ: NVDA), following billionaire investors’ investment strategies could set you up for big gains. However, due diligence is necessary. Do not blindly follow every step of billionaires but do keep an eye out for the trades they make. We’ve recently seen several investors load off Amazon.com Inc (NASDAQ: AMZN) from their portfolio and they are putting money in growth stock Shopify Inc (NYSE:SHOP) instead.
Key points in this article:
- Billionaire investors are selling Amazon and investing in Shopify instead.
- Driven by Black Friday sales, Shopify is set to report an excellent fourth-quarter.
- SHOP stock is much cheaper than Amazon stock, with a high upside potential.
- However, before you join the bandwagon, do take a look at our free “The Next NVIDIA” report.
Battle of two e-commerce giants
- Millennium Management sold 7.9 million shares of Amazon and reduced their position in the company by 87%.
- Moore Capital Management sold 616,475 shares of Amazon and reduced its position by 76%.
- Rokos Capital Management sold 755,165 shares of Amazon and reduced the position by 39%.
On the other hand, investors are adding Shopify to their portfolio.
- Sheets Smith Wealth Management has purchased 4,207 shares of Shopify valued at $447,000.
- Baillie Gifford & Co. increased its stake in the company by 14.7% while FMR LLC increased the stake by 16.1%.
- The Manufacturers Life Insurance Company has increased its stake by 6.3%.
While both are strong e-commerce companies, Shopify has a massive expansion potential. It is focusing on automation and artificial intelligence which has helped merchants see record revenue growth. The platform allows merchants to sell their products and consumers to make quick purchases. Additionally, developers on the platform can build and add more features while retaining the complete amount of revenue up to $1 million. Those merchants who shift away from Amazon, often use Shopify to reach out to the customers.
Since the IPO in 2015, SHOP stock has soared over 1000% and was up 30% in the past year. Trading at $106, the stock is fairly valued and much cheaper than Amazon which trades at almost double the price, for $235. A large-cap stock like Amazon may see slower growth in 2025 as compared to a mid-cap growth stock like Shopify. Its revenue numbers have impressed the market with Cyber Monday sales increasing by 24% in gross merchandise value.
Strong fundamentals
The e-commerce industry has grown at a massive rate post-pandemic and it still has a lot of room to grow. Shopify offers a wide range of services for merchants and customers in addition to tools for social media platforms. The steady growth in merchants shows that the company caters to the changing times and is only scratching the surface right now. In the third quarter, Shopify reported $2.16 billion in revenue, up 26% year-over-year and it was its ninth consecutive quarter of revenue beat. The net income stood at $344 million while its EPS came in at $0.64. It has successfully benefited from Black Friday sales which is an indicator of a strong fourth quarter with $5 billion in gross merchandise value.
Wall Street analysts are positive on the stock
There is positive market sentiment around the stock with several analysts increasing the price target. RBC Capital Markets has an Outperform rating with a price target of $130. They have also highlighted it as a top pick for 2025. Deutsche Bank has a price target of $125 with a buy rating while Loop Capital Market has a buy rating with a price target of $140.
Strong fourth-quarter results will boost the stock and take it closer to the 52-week high of $120. If Shopify manages to grow according to its estimated earnings growth through 2026, we could see investors taking home big gains.
The biggest growth driver for Shopify in 2025 will be AI and automation, making it easier for merchants to handle their daily workflows. This will not only help reduce costs but will also save time. With the shift towards online shopping, Shopify is here to stay and it will make the most of this transition. The company has what it takes to succeed in the competitive industry today.
Amazon vs Shopify
Amazon is undoubtedly a leader in the e-commerce space but the stock is already trading at a premium. If you are looking for a cheaper alternative with high upside potential, consider Shopify before the company announces results. It is set to report fourth-quarter results on February 11 and I believe it will beat expectations, driven by the strong holiday sales.
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