Shopify Subordinate Voting Ord Shs Class A T.SHOP

Proposal re Founder's Shares

[Experienced]

I read over the description of the proposal for reorganization of the share structure and the issuance of Founders Shares.

In my experience in the stock market over the decades I have seen many attempts by founders/major shareholders to line their pockets and keep control of the company and this latest proposal by SHOP is yet another example.

Here are my thoughts...

1...the proposal to ensure that the company founder maintains a 40% stake in the company means that any further raises by the company which involve the ussuance of shares would mean double dilution to existing shareholders since the founder would automatically get additional free shares to maintain the 40% control number - this is not a good thing for existing shareholders

2....Point 1 raises another point.  Why are they doing this now?  Is it perhaps because the company plans to issue a boatload of shares to pay for the acquisition of Deliverr?  Who knows but the timing does raise questions.

3....In my experience, such a proposal is highly unusual.  Most Founders are issued shares at the birth of the company but typically their share of the company gets diluted as time goes on with new equity raises.  Typically, Founders have the opportunity to maintain some of their control through performance stock options.  In the case of this proposal the Founder gets additional shares if there is a raise irrespective of the performance of the company (nice work if you can get it...lol).

When you put the following factors together, it is not surprising that The Street is selling off SHOP....

a.....buying Deliverr for 2.1 billion is an expensive way to achieve the objective and it is not even clear that the objective will be met at all especially when you are against players who are known to fight dirty like AMZN.

b.....unlike most companies when they buy something they say the purchase was accetive to earning (even if in most cases it is not), SHOP says the purchase will be initially dilutive to earnings - ie...lower earnings -- lower SP.....wow hubba hubba

c.....the proposal for the Founders shares raises the spectre of further additional dilution by existing shareholders especially if shares are issued to buy Deliverr which IMHO is a distinct possibiity

[rosewell]

Amazing post. Totally agree. Guys basically hang in there and start a building a position over the next 3 months. Stock can go as low as Cad$350 to as high as Cad$ 600. I want to see this through and see what shopify really does. I only own 5 shares but will get 20 more shares over time. Bought my 5 shares at 525. Will buy 5 more at 450, then 10 at 400 and 5 at any price between 350-400. Sorry

[Experienced]

Good post...always good to have a strategy My overall assessment of SHOP is that it is a good company and that is why I am following the company.  That said, as indicated in my previous posts here, I am in a "wait and see" stance since there is no clear indication to me what the future direction of the SP will be. However, I do feel that the company right now has "lost its

[rosewell]

Looks like I will get the opportunity to buy at $450 today. Have put an order already.

[1condor]

rosewell...why not just wait for an uptick before buying? The falling knife scenario is still in play.

[diamondlessnono]

I'm thinking 375.00

[rosewell]

I know and agree. but i have seen this happen a lot that when markets fall they fall rapidly and when they rise you dont know what hit you. agreed it wont go anywhere but at this price i have to take a shot. people were willing to pay over 1k only a few months ago...

[BiggyG]

Not a holder but watching as well. This is currently a big gamble. In this case the house definitely has all the odds in its favour. Wish everyone who buys today the best of luck, I am happy watching/waiting for another trade opportunity right now. I traded last week for 7% gain happy to be back in cash