After Shopify (NYSE: SHOP) was touted as the next Amazon (NASDAQ: AMZN), it was hard not to pay attention to the stock. With practically all analysts covering the company, Shopify stock is incredibly visible. However, the e-commerce platform provider recently pulled off a clever move that not too many investors caught.

In this pandemic market, cash is king, and companies are racing to raise funds to fortify their balance sheets–many through debt offerings. Shopfiy took a different approach.

Secondary Swing for the Fences

As Shopify stock hit all-time highs earlier this month–and continues to push higher–the company conducted a secondary offering to raise capital at a premium valuation. This offering accomplished a few key goals for Shopify.

First, the company was able to raise capital to shore up the balance sheet. Although there wasn’t a real question of whether or not Shopify would survive this pandemic (it will), the extra cash doesn’t hurt its value proposition. Also, by raising this cash through equity, as opposed to debt, the balance sheet is further preserved.

As for the specifics, Shopify offered a total of 2.13 million shares of Class A common stock for $700 per share. The underwriters had an over-allotment option for an additional 277,500 shares. The entire secondary offering was valued at up to $1.68 billion.

Citigroup and Credit Suisse acted as the book-running managers, and Canada’s National Bank Financial acted as the co-manager for the offering.

As expected, Shopify intends to use the net proceeds from the offering to strengthen its balance sheet, providing flexibility to fund its growth strategies. In the meantime, Shopify intends to invest the proceeds in short-term, investment grade, interest bearing instruments, or hold them as cash.

Investors may have been caught up in Shopify’s collaboration with Facebook (NASDAQ: FB); at least most investors were, as reflected in Facebook’s stock.

As it stands, Shopify’s stock has outperformed the S&P 500 and Dow Jones industrial average. The stock is up 93% year to date compared to the S&P and Dow, which are still down 7% and 12%, respectively. Shopify has a market cap of roughly $80 billion.

Lagging Analysts

Despite Shopify’s outperformance throughout this pandemic, a couple of analysts released reports that were less than positive. It begs the question, are these analysts correct? Will Shopify pull back after this incredible run, even with pandemic concerns abating?

SunTrust Robinson Humphrey reiterated a Hold rating and raised its price target to $700 from $585. Note that this price target is exactly where Shopify priced its secondary offering. If anything, this could be a price floor.

In the report, SunTrust noted that despite the negative trends that unfolded in March, the first quarter was relatively strong and more importantly, trends in April reflected improvement with some pockets of outright strength.

Although macro uncertainty, downselling and merchant weakness could persist, SunTrust believes that a quickening shift to online sales, among other factors, could accelerate Shopify’s growth. However, the firm believes that this will not be fully realized until 2021; hence the Hold rating.

SunTrust might be on the sidelines for Shopify currently, but in the longer term, the firm sees continued growth.

Separately, Wedbush reiterated a Neutral rating with a $550 price target. This brokerage firm continues to view Shopify as positioning itself to be a core retail OS, not just an e-commerce platform. This development comes with an accelerated pace of product launches, like the Shop consumer-facing app, and the new point of sale (POS) solution.

Shopify POS Plus is a centerpiece of Shopify’s strategy as it brings more brick and mortar retail onto its platform during the pandemic. With an ability to integrate physical retail and Shopify’s e-commerce platform, as well as cross-platform sales, like order online for pickup in-store and curbside pickup, POS is a key step to becoming a true omnichannel platform. And with pressure on shipping channels and fulfillment during Covid, the investment in POS Plus  becomes even more important.

All this seems positive and Wedbush is definitely upbeat about  Shopify’s future. However, the firm sees the current valuation as pricing in the opportunity more than anything else; hence the Neutral rating.

It’s relatively easy to stay on the sidelines for Shopify, especially after the stock has seen astronomical growth over the past few years. Also considering market headwinds with the pandemic, staying neutral on high-growth companies is prudent. However, Shopify has been known to beat expectations again and again.

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