Mawer Investment Management Bails on Shopify
Mawer Investment Management has left its investment in Canadian eCommerce platform Shopify, with Director of Research Vijay Viswanathan pointing to concerns about rising competition in the space and its recent acquisition of eCommerce fulfillment provider Deliverr, Bloomberg reported Friday (June 10).
Shopify became Canada’s most valuable public company during the COVID-19 pandemic, exceeding $200 billion in market value, but the stock is down about 75% in 2022, the report said. Mawer first invested in Shopify in 2017, two years before its initial public offering (IPO), later selling off some of its shares as the stock rose.
Viswanathan said on a Mawer podcast that the eCommerce space is getting “crowded,” citing Amazon’s move to combine its payment and fulfillment services and make them available on other websites.
“Amazon is making their foray with their ‘Buy With Prime’ piece,” he said. “We’re seeing a slowdown in eCommerce and we’re seeing a slowdown in the results at Shopify. It became harder and harder to justify the valuation.”
Shopify announced the Deliverr deal in May, with the $2.1 billion acquisition marking its largest-ever addition. Viswanathan called the move “a pretty expensive acquisition in our estimation.”
“It may work out great for them, but essentially moving into fulfillment,” he said. “That probably increases the risk as they have to get that right in order to continue to compete.”
The selloff doesn’t mean Mawer will never be a Shopify backer again, said Viswanathan.
“We still think it’s a good business or a very good business that’s well-run,” he said. “One day it may be back in the portfolio.”
Shopify plans to merge Deliverr with its own fulfillment network to create a larger, broader logistics unit. Deliverr helps merchants on online marketplaces including Amazon and eBay get their products to consumers in two days or less.
San Francisco-based Deliverr uses analysts to predict where people might be interested in buying goods, then employs the information about their wants and needs to ensure items can be delivered quickly.