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☕ Shopify: buy, sell, or hold?

May 14, 2024

Good morning! 👋

That didn’t take long.

Wholesale prices rose 0.5%, more than expected. And, in response, the benchmark US 10 YR did too. Then, when traders concluded this wasn’t as big a deal as they feared, they got on the gas anyway.

Prices are higher as I type.

Here’s my playbook.

1 – Microsoft, meme stocks and Walmart, oh my

The super-sharp Stuart Varney very kindly invited me back today to discuss all three ahead of the opening bell. (Watch)

My take may surprise you. 😊

2 – Another warning shot (and an opportunity)

Stellantis – which formed in 2021 via the merger of Italian American conglomerate Fiat Chrysler and French PSA Group – is going to export more Chinese vehicles to Europe. (Read)

The stock has drifted around in the low $20 range, but this move could herald a return to the low $30s.

Why?

US business conditions are getting worse for any number of reasons and the international business community knows it. Today’s tariffs are but one tiny part of the puzzle.

I’ve mentioned this several times ... Google has moved “core” jobs offshore, Burger King went to Canada and Budweiser – yes, Bud – now calls Belgium home.

I think this move is telling.

Stellantis is going to help China export and sell EVs in Europe, effectively bypassing America. Margins are bigger so it could be just the ticket for higher share prices a few quarters from now.

Btw, there are three other plays here – all of which I recommend in One Bar Ahead®, my paid research journal. I’d love to earn your trust, goodwill, and business if that’s of interest.

MyPOV: Tariffs don’t work on anything other than an extremely short-term basis. So, focus on companies that will move forward anyway. Money, like water, will flow to where it’s treated best.

3 – Shopify: buy, sell, or hold?

I’ve recommended the stock in the past with great effect. The OBA Family, in fact, had several opportunities to capture at least 100% returns.

Now, not so much.

The company turned in solid Q1 results that reflect roughly 23% growth top line. Merchandise volume and payment volumes grew by 23% and 32%, respectively. Subscription revenues tacked on 34%. (Read)

Management expects to move into enterprise sales by adding companies like Tapestry for outlet shoppers. International sales are growing too as clear by Market Pro, a native application that helps users sell in multiple countries.

I’m skeptical, but not because I think the company stinks.

Keith’s Investing Tip: SHOP is a great example of something we talk about frequently. It’s an “n+1” choice, not the “Zero to 1’s” that I prefer. In other words, the entire argument is based on doing “shopping” better, not creating something unique. Read Peter Thiel’s book by the same name, Zero to One, if you haven’t already.

4 – AWS's Selipsky hitting the highway

AMZN has announced that Adam Selipsky, CEO of Amazon’s cloud computing business, will step down from his role next month. (Read)

I can’t help but wonder if something’s up.

Amazon doesn’t make changes in key business units for no reason. What’s more, the corporate culture is reportedly ‘dog eat dog.’

I suspect that Selipsky may have hit a plateau.

Reading between the lines, management wants to change the lineup.

Trade Idea: Not surprisingly, AMZN is down today a skosh and volatility is up. That could make for an interesting opening for options traders who want to sell puts deep outta the money.

5 - JPow speaks but nobody gives a rip

Fed Chair Jerome “JPow” Powell is speaking to the Foreign Banker’s Association general meeting today in Amsterdam and traders will be looking for any signs that he’s going to hike rates. (Watch)

🤦‍♂️

Mr. Chairman, why don’t you quit blathering on to the hi-pinky club and consider talking to everyday Americans?

Just a suggestion.

And an open invitation from yours truly to take a drive around this country of ours and talk with real folks who are getting eviscerated by your policies and who need real help.

I’ll even buy you a $20 hamburger and fries, never mind that it should cost half that.

I hope to hear from you!