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Shopify (SHOP) Slid in Q2 Despite Strong Results

Baron Funds, an investment management company, released its “Baron Fifth Avenue Growth Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. In the second quarter, the U.S. large cap was once again the place to be. The fund increased 5.7% (Institutional Shares) in the second quarter compared to an 8.3% gain for the Russell 1000 Growth Index and a 4.3% increase for the S&P 500 Index. Year to date, the fund returned 19.1% compared to 20.7% and 15.3% gains for the indexes. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Baron Fifth Avenue Growth Fund highlighted stocks like Shopify Inc. (NYSE:SHOP) in its Q2 2024 investor letter. Headquartered in Ottawa, Canada, Shopify Inc. (NYSE:SHOP) provides a cloud-based commerce platform and services. The one-month return of Shopify Inc. (NYSE:SHOP) was 41.73%, and its shares gained 11.03% of their value over the last 52 weeks. On August 30, 2024, Shopify Inc. (NYSE:SHOP) stock closed at $74.07 per share with a market capitalization of $95.454 billion.

Baron Fifth Avenue Growth Fund stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q2 2024 investor letter:

“Shopify Inc. (NYSE:SHOP) is a cloud-based software provider for multi-channel commerce. Shares declined 14.4% in the second quarter despite reporting solid quarterly results with revenue growth of 23% year-over-year, which implies continued market share gains, after the company announced it is entering an investment cycle. Since the increased investment period comes after over a year of consistent margin expansion, it left short-term-focused investors disappointed. We however believe that this is the right course of action for several reasons. First, the company expects solid returns on the increased marketing spend with 18-month payback periods. Second, the investment should help solidify Shopify’s competitive position and drive further market share gains. Finally, the increased spend should contribute to the probability of success in newer areas of opportunity with large addressable markets, including offline commerce, international, and enterprise. Shopify shared several metrics showing early success, with gross merchandise value up 130%, 38%, and 32% year-over-year in B2B, EMEA, and offline, respectively. We remain shareholders due to Shopify’s strong competitive positioning, innovative culture, and long runway for growth, as it still holds less than a 2% share of the global commerce market.”

A young woman shopping for a vintage fashion item online.

Shopify Inc. (NYSE:SHOP) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held Shopify Inc. (NYSE:SHOP) at the end of the second quarter which was 65 in the previous quarter. Shopify Inc.’s (NYSE:SHOP) second-quarter revenue was $2 billion, up 21% year-over-year. While we acknowledge the potential of Shopify Inc. (NYSE:SHOP) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Shopify Inc. (NYSE:SHOP) and shared the list of stocks Jim Cramer is talking about as markets rebound. Polen Focus Growth Strategy established a position in Shopify Inc. (NYSE:SHOP) during Q2 2024. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

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

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The #1 Lithium Stock to Watch Going into 2025

A Recent Monumental Shift in the Mining Arena has Shined a Big Spotlight on Lithium!

Many eyes are once again locked on the critical mineral since Rio Tinto, the 2nd largest mining company in the world, acquired Arcadium Lithium PLC. The acquisition immediately catapulted Rio Tinto to becoming the world’s 3rd largest lithium producer.

Why would a big mining giant like Rio Tinto be interested in acquiring a lithium producer?

Because they recognize there is a tremendous need for lithium in the world’s energy transition. Rio Tinto CEO Jakob Stausholm said Rio is confident that long-term demand for lithium will be strong.

This is the largest mining deal in the world since 2007 and marks a significant milestone to the lithium industry as it depicts a massive shift in sentiment from the big mining companies.

As the race to find secure lithium supplies continues, an underfollowed lithium explorer is causing quite the commotion as Wall Street learns about the company’s disruptive lithium land package in Brazil!

Why is Brazil Important?

In less than two years, Brazil emerged from ZERO exports to the fifth-largest lithium exporter in 2023 with projections of a fivefold production increase in the next five years! To say that Brazil is undergoing a lithium boom is an understatement!

Lithium exploration is accelerating in Brazil, in the wake of the relaxing of regulations and growing demand for the mineral that’s crucial to the global transition to electric vehicles. The country has relaxed its lithium export regulations, which has attracted global investment and transformed the country into a major producer of the critical element.

Brazil is being noticed for its prolific lithium appeal…

In August 2024, Australian lithium giant Pilbara Minerals announced its plans to acquire Latin Resources for approximately A$559.9m ($371.12m) to diversify its operations.

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