Here’s Why Shopify (SHOP) Surged Since the Second Quarter

Rowan Street Capital, an investment management company, released its August update recently. A copy of the same can be downloaded here. Since the end of the second quarter, the fund has been 30% up. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

Rowan Street Capital discussed stocks like Shopify Inc. (NYSE:SHOP) in the August update letter. Headquartered in Ottawa, Canada, Shopify Inc. (NYSE:SHOP) is an e-commerce platform. On October 10, 2022, Shopify Inc. (NYSE:SHOP) stock closed at $26.45 per share. One-month return of Shopify Inc. (NYSE:SHOP)  was -19.11% and its shares lost 80.51% of their value over the last 52 weeks. Shopify Inc. (NYSE:SHOP)  has a market capitalization of $33.549 billion.

Here is what Rowan Street Capital specifically said about Shopify Inc. (NYSE:SHOP) in its August month investor letter:

“The following quote from the Q2 earnings call by Toby Lutke (CEO) best explains the transition that Shopify Inc. (NYSE:SHOP)’s business is going through:

‘Shopify has always been a company that makes the big strategic bets our merchants demand of us. This is how we win. During the pandemic, we made a bet that retail spend would disproportionately favor e-commerce at a much higher pace than it has. Our belief was that the channel mix, the share of dollars that travel through e-commerce rather than physical retail, would permanently leap ahead. As we built for the digital leap, we stepped our efforts and expanded the company accordingly. We couldn’t know for sure at the time, but we did know that if the prediction came true, we would have to rapidly scale the company to meet that future. Fast forward to now, as things have turned out differently. While the normalized rate of spend online, which is where most of our merchants’ orders occur, has reset certainly higher than where it was in 2019, the rate is lower than we had planned for. In short, we overshot our prediction. Recalibrating our investments and spending, we are making sure we do not sacrifice the components we feel are critical for Shopify to remain in an enviable position in a massive growing market as an enabler of multichannel commerce.’“

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Shopify Inc. (NYSE:SHOP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 60 hedge fund portfolios held Shopify Inc. (NYSE:SHOP) at the end of the second quarter which was 72 in the previous quarter.

We discussed Shopify Inc. (NYSE:SHOP) in another article and shared L1 Capital’s views on the company. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.