Day: September 23, 2024

Six publicly traded U.S. companies have market values of at least $1 trillion. From largest to smallest, that elite group includes Apple, Microsoft, Nvidia, Alphabet, Amazon, and Meta Platforms. But more companies will join the list as the global economy expands in the coming years.

For instance, Shopify (NYSE: SHOP) is currently worth $101 billion, but its market value could reach $1 trillion before 2040. If that happens, Shopify stock will return 890% over the next 15 years, which equates to 16.5% annually.

Here’s what investors should know about this brilliant growth stock.

Shopify is a leader in e-commerce and omnichannel software

Shopify is the market leader in e-commerce and omnichannel commerce software. What sets the company apart is its unique ability to simplify retail. Its platform lets merchants run their businesses across physical and digital channels from a single dashboard. It integrates with online marketplaces like Amazon and social media platforms like Meta’s Facebook and Instagram, and it helps merchants build direct-to-consumer websites.

Shopify also offers adjacent solutions for marketing, payments, and logistics and addresses back-office functions like tax compliance, bill payments, and fraud protection. Additionally, the company caters to larger brands with Shopify Plus and Commerce Components. The former is an enterprise-grade platform with more sophisticated features than Shopify’s standard software, and the latter lets enterprises build commerce platforms from scratch, using individual parts of Shopify’s technology stack.

Importantly, Shopify Plus and Commerce Components include solutions for business-to-business (B2B) e-commerce, also called wholesale. According to Grand View Research, this market is three times bigger and growing two times faster than retail e-commerce. In the second quarter, Forrester Research named Shopify a leader in B2B commerce tools, citing rapid product development and artificial intelligence features as key strengths.

Collectively, the wholesale and retail e-commerce markets are expected to grow at 18.9% annually through 2030. But Shopify’s sales growth should outpace the industry average. Its ability to simplify commerce is a compelling value proposition for businesses of all sizes, and the company has proven itself adept at deepening its relationship with merchants over time.

Shopify looked strong in the second quarter

Shopify reported strong financial results in the second quarter. Gross merchandise volume (GMV) jumped 22% to $67 billion, and revenue increased 21% to $2 billion. But revenue increased 25%, excluding the impact of the logistics business, which Shopify sold in the second quarter last year. Meanwhile, non-GAAP (generally accepted accounting principles) net income increased 85% to $0.26 per diluted share.

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Management highlighted strong momentum in wholesale, physical retail, and international commerce, three growth vectors where the company has made a concerted effort to gain share. Specifically, wholesale GMV more than doubled, offline GMV increased by 27%, and the number of international merchants on the platform increased by 30% during the second quarter.

Looking ahead, Shopify still has plenty of room to grow its business. The company has captured less than 2% of its serviceable addressable market, which it values at $404 billion. Moreover, management believes that opportunity will reach $849 billion as the company expands into new geographies.

How Shopify can become a trillion-dollar company before 2040

Wall Street forecasts Shopify’s revenue will grow at 21% annually through 2027. That is plausible, given that global e-commerce sales are projected to increase at 18.9% annually through 2030. Assuming revenue growth decelerates gradually, Shopify’s top line could compound as quickly as 16% annually over the next 15 years.

In that scenario, the company’s trailing-12-month revenue would reach $71.9 billion after the quarter ending in June 2039. At that point, if shares trade at 14 times sales, a discount to the three-year average of 15.4 times sales, Shopify would be worth $1 trillion. That implies annual shareholder returns of 16.5% over the next 15 years.

However, the stock would still compound at 11.2% annually, even if Shopify was only worth $500 billion by 2039. Returns of 11%-plus would almost certainly beat the benchmark S&P 500. In other words, even if my $1 trillion prediction is 50% too high, Shopify shareholders could still see market-beating returns over the next 15 years.

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(Bloomberg) — The euro slumped and German yields fell as weaker-than-expected data fueled concern the region’s economic recovery has hit a wall, spurring wagers on more aggressive rate cuts from the European Central Bank.

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The common currency weakened 0.7% against the dollar, heading for its steepest daily decline since June. The gap between French and German benchmark yields climbed to the highest level since early August.

European stocks fluctuated, with so-called defensive plays in the food, telecoms, real estate and utilities sectors faring best. US futures pointed to a flat open on Wall Street with indexes hovering near record highs after the Federal Reserve’s jumbo rate cut last week.

Investors are increasingly wary of European assets as the region’s manufacturing downturn deepens and political turmoil in France continues. Weak PMI data for France and Germany on Monday was followed by numbers that showed the euro-area’s private-sector economy shrank for the first time since March.

“The market is almost demanding a more aggressive rate cut, especially after what we have seen the Fed has done,” Marija Veitmane, senior multi-asset strategist at State Street, said on Bloomberg TV. The ECB “is definitely behind the curve,” she said.

Investors will be watching for speeches from Fed officials on Monday for fresh insight on the pace and scope of easing. Further out, the Fed’s preferred price metric and data on US personal spending will be in focus on Friday.

In Europe, the composite Purchasing Managers’ Index by S&P Global dropped to 48.9 in September from 51 the previous month — below the 50 threshold separating growth from contraction. Analysts had expected the measure to slip only marginally, to 50.5.

The widening yield gap between France and Germany shows investors remain on edge over France’s political and fiscal challenges. French Prime Minister Michel Barnier said his new government could increase taxes for big business and the wealthiest as it seeks to repair runaway budget deficits.

The spread, a proxy for French risk, climbed to 80 basis points, the widest since Aug. 5. It’s been trading significantly wider since President Emmanuel Macron called a surprise election in June, spooking investors over the country’s ability to bring its large deficit under control long-term.

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Elsewhere, Asian markets were lifted by speculation China is close to announcing fresh stimulus, after a cut to a short-term policy rate and a rare economic briefing scheduled for Tuesday.

“The start of the Fed easing cycle should lead to more stimulus from China, particularly as the 5% growth target seems difficult to achieve,” Mohit Kumar, chief strategist and economist for Europe at Jefferies International Ltd., wrote in a note. The “stimulus measures should also be beneficial for Europe.”

Gold touched a record high earlier before paring the move, as the worsening strife in the Middle East fueled wagers on further price gains in the metal due to its haven status.

Key events this week:

• UK S&P Global Manufacturing PMI, S&P Global Services PMI, Monday

• Australia rate decision, Tuesday

• Japan Jibun Bank Manufacturing PMI, Services PMI, Tuesday

• Mexico CPI, Tuesday

• Bank of Canada Governor Tiff Macklem speaks, Tuesday

• Australia CPI, Wednesday

• China medium-term lending facility rate, Wednesday

• Sweden rate decision, Wednesday

• Switzerland rate decision, Thursday

• ECB President Christine Lagarde speaks, Thursday

• US jobless claims, durable goods, revised GDP, Thursday

• Fed Chair Jerome Powell gives pre-recorded remarks to the 10th annual US Treasury Market Conference, Thursday

• Mexico rate decision, Thursday

• Japan Tokyo CPI, Friday

• China industrial profits, Friday

• Eurozone consumer confidence, Friday

• US PCE, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.1% as of 10:14 a.m. London time

• S&P 500 futures were little changed

• Nasdaq 100 futures rose 0.1%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index rose 0.2%

• The MSCI Emerging Markets Index rose 0.2%

Currencies

• The Bloomberg Dollar Spot Index rose 0.2%

• The euro fell 0.6% to $1.1100

• The Japanese yen was little changed at 143.71 per dollar

• The offshore yuan fell 0.3% to 7.0609 per dollar

• The British pound fell 0.3% to $1.3283

Cryptocurrencies

• Bitcoin rose 0.5% to $63,513.33

• Ether rose 2.9% to $2,648.52

Bonds

• The yield on 10-year Treasuries was little changed at 3.74%

• Germany’s 10-year yield declined five basis points to 2.16%

• Britain’s 10-year yield was little changed at 3.90%

Commodities

• Brent crude fell 0.1% to $74.39 a barrel

• Spot gold fell 0.2% to $2,616.83 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Catherine Bosley.

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©2024 Bloomberg L.P.

Key Takeaways

• Dell and Palantir are set to join the S&P 500 on Monday as part of the index’s quarterly rebalancing.

• Erie Indemnity also is joining the S&P 500. American Airlines Group, Etsy, and Bio-Rad Laboratories are being shifted to smaller indexes.

• The exposure associated with inclusion in major indees, as well as buying from index funds tracking the benchmarks, can support companies’ stocks.

The S&P 500 gets three new members Monday, with Palantir Technologies (PLTR), Dell Technologies (DELL) and Erie Indemnity (ERIE) set to join the benchmark index.

The trio will replace American Airlines Group (AAL), Etsy (ETSY), and Bio-Rad Laboratories (BIO). American Airlines and Bio-Rad will be part of the S&P MidCap 400 index, while Etsy will join the S&P SmallCap 600 index.

S&P Global announced the moves, part of its quarterly rebalancing, two weeks ago. It periodically shifts companies between its indexes to ensure they are accurately represented in terms of their market capitalization.

What S&P 500 Inclusion Can Mean

Companies often get a boost when their stock is added to a major index like the S&P 500, as the inclusion exposes them to a wider group of investors who could become aware of a company through an index.

The stock could also get a boost as its shares start to be included in index funds, which look to mirror the performance of a broader index by including shares of the companies included in it.

Shares of Dell closed Friday down 0.2%, while and Palantir rose 1%. Both shares have moved higher overall over the past two weeks since the announcement was made, as have shares of Erie, which fell 1% Friday.

Read the original article on Investopedia.

Many people in their 20s deal with credit card debt or student loans, sometimes thinking they’ll figure it out later. But what happens when that debt piles up to nearly a million dollars? That’s the reality a 29-year-old named Channing from Washington D.C. faced during an episode of The Dave Ramsey Show.

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Channing and her husband were grappling with nearly $1 million in debt, a number that had Ramsey quickly diving into tough-love mode. Sure, he’s seen scenarios where people are in over their heads with debt, but at just 29, this was particularly alarming to Ramsey.

Channing, who recently married, explained, “My husband and I have probably just under a million dollars in debt and we want to know how to get debt-free without filing for bankruptcy.” The breakdown included $335,000 in student loans, $136,000 in credit cards and $44,000 in personal loans. Their combined household income was about $230,000 a year.

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Ramsey didn’t hold back. After calculating the staggering numbers, he addressed the couple’s situation bluntly. “You guys have been living at about 10x where you’re going to get to live for the next three years,” Ramsey said. “I’m getting ready to destroy your life as you know it.”

“You’ve gotten used to spending like you’re in Congress,” he scolded. He was clear that their lifestyle needed a complete overhaul. Ramsey emphasized that their financial habits would have to change drastically, stating, “You’re not gonna see the inside of a restaurant unless it’s your extra job or you’re waiting on someone you work with during the day.” He added, “You’re gonna be living on beans and rice, rice and beans.”

See Also: Charlie Munger said if you want to be rich, “find a way to get your hands on $100,000” — here’s what he means.

Ramsey went on to stress the emotional and spiritual challenges ahead. “Your friends are going to think you’ve lost your mind and your mother is going to think you need counseling,” he warned, adding that both Channing and her husband would need to stop caring what others think if they wanted to tackle their debt successfully.

He also shared a personal connection to their situation, saying, “This is exactly what I did in my 20s. I bought and purchased a lifestyle that was 5x to 10x what I had. It was all because of crap inside of me that caused me to do that.”

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Ramsey’s advice wasn’t just about cutting expenses but about confronting the mindset that had led to their financial missteps. “The problem is what’s going on inside you guys,” Ramsey said. “You’re on a suicide mission right now.”

The tough conversation ended on a hopeful note, though. Ramsey assured Channing that while the journey would be difficult, it was possible. “You can do it, though,” he said. “I know. I’ll help you.”

Channing and her husband are now facing a major lifestyle change to climb out of their nearly $1 million debt, with Dave Ramsey’s guidance pointing them toward a more financially stable future. Sometimes debt happens, but at least they’re taking steps to address the issue and make changes before they’re left resorting to more extreme options such as bankruptcy.

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This article Dave Ramsey Tells 29-Year-Old $1M In Debt And Spending Like She’s In Congress: ‘I’m Getting Ready To Destroy Your Life As You Know It’ originally appeared on Benzinga.com

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SINGAPORE (Reuters) -Bitcoin was the notable mover as it reached for one-month highs on Monday, sustaining its rally after the Federal Reserve’s super-sized rate cut last week, while the yen extended its decline in markets thinned by a Japanese holiday.

The dollar strengthened against the yen last week after policy meetings in both the United States and Japan, hitting its highest level in two weeks at 144.50 yen. It was around 144.16 on Monday.

The Bank of Japan (BOJ) left interest rates unchanged last week and indicated it was not in a hurry to hike them again. That decision, coming just days after the Fed’s 50 basis points (bps) rate cut, put a pause to the yen’s sharp gains this month. The currency is up 1.4% in September.

With Japan closed for Autumnal Equinox Day, the main driver of trade was expectations around further Fed rate cuts and the gains those have spurred in equities, commodity currencies and other risk assets.

Bitcoin was up 1.8% at $63,954, hovering near one-month highs. Ether was 3% higher at 2,660.30, near its highest since late August.

Chris Weston, head of research at Pepperstone, said the ‘goldilocks macro backdrop’ is the key factor driving the solid upside momentum.

“For now, this is a rally that is there for chasing. As we’ve seen over the years, when Bitcoin goes on a run, the trends can be powerful and FOMO can really get the crypto players fired up”

The Australian dollar was 0.4% higher at $0.68355, digesting its rise of more than 3% in less than two weeks.

The U.S. dollar index, which measures the greenback against six major currencies, was at 100.75, continuing to stay above the one-year low it hit last week. Euro was flat at $1.1165.

The Fed’s rate cut “appears to have calmed market fears of a U.S. recession”, Goldman Sachs said in a note. “Our G10 FX team expect a slight rebound for the U.S. dollar over the next 3 months, before easing again on a 6- and 12-month view.”

Fed futures traders have priced in 75 bps in rate cuts by the end of this year, and nearly 200 bps in cuts by December 2025 that will take the Fed’s policy rate by the end of next year to 2.75%, according to CME FedWatch.

The U.S. Treasury yield curve has been steepening after the Fed’s rate cut, and investors added to bets favoring a second outsized rate cut after Fed Governor Christopher Waller said on Friday he was worried inflation may soon be running substantially below the central bank’s 2% target.

Meanwhile, the majority of economists polled by Reuters anticipate two more 25 bps rate cuts at the Fed’s final two meetings this year.

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In weekend news, U.S. House Republicans unveiled a three-month stopgap bill to avert a government shutdown.

For the yen, an upcoming ruling party vote later this week to choose a new prime minister makes the BOJ’s job challenging in the coming months. A snap election is seen as likely in late October.

Liberal Democratic Party frontrunners to replace outgoing Prime Minister Fumio Kishida have presented diverse views on monetary policy.

Sanae Takaichi – who would become the nation’s first female premier – is a reflationist who has accused the Bank of Japan of raising rates too soon. Shigeru Ishiba has said the central bank is “on the right policy track”, while Shinjiro Koizumi, son of charismatic ex-premier Junichiro Koizumi, has so far only said he will respect the BOJ’s independence.

The selection presents two-way risks for yen, Barclays analysts wrote on the weekend. “The main risk here is if Abenomics advocate Takaichi wins, this could pose headwinds to the BOJ’s policy-normalization plan and raise concerns about fiscal discipline,” they said.

That could lead to a steeper Japanese bond curve and downside pressure on the yen as investors pare expectations for another rate rise, they said.

The Bank of England kept rates unchanged on Thursday, with its governor saying the central bank had to be “careful not to cut too fast or by too much.”

The pound was little changed at $1.3315, staying near highs it hit on Friday after the release of strong British retail sales data.

(Reporting by Vidya Ranganathan in Singapore; Editing by Jamie Freed and Kim Coghill)