Shopify (SHOP) is surging again, even as most other unprofitable high-growth stocks continue treading water. Shares of the Canadian e-commerce darling rose more than 12% in the past month. The stock ended Friday 3.4% higher than the beginning of the week, on the back of continued optimism surrounding its deal with Alphabet’s (GOOGL) Google.
In what could be a major blow to Amazon (AMZN), Google plans to take its partnership with Shopify to the next level, by allowing Shopify's ~1.7 million merchants to have their stores discoverable through Google's search engine. (See SHOP stock analysis on TipRanks)
Google and Amazon Duke it Out
Undoubtedly, Google's "Shopping" tab has been an underrated tool that could have been better utilized in its battle against Amazon. The disruptive force that is Amazon has beckoned many digital shoppers to go straight to its app or website, pushing Google searches right out of the equation. Call it a side effect of Amazon's dominance, if you will.
These days, many folks looking to buy goods online have made going straight to Amazon (and not Google) a habit, especially during COVID-19 lockdowns. Through the eyes of many Amazon Prime users, Amazon is the ultimate one-stop-shop on the internet.
The latest Shopify-Google partnership could allow Google to pry back a bit of the shopping-focused searches lost at the hands of Amazon. If the partnership goes well, it could challenge Amazon's status as the ultimate one-stop-shop.
Google and Shopify Join Forces
There's no question that Amazon's continued strength in e-commerce has had a drastic negative impact on small-sized retailers with which it is in direct competition. Less known is the impact Amazon has had on large-scale firms, such as Google. They are not engaged in the same battlefield as small retailers are, but nonetheless feel increasing pressure from Amazon's growing dominance.
With the exception of cloud services, Amazon and Google aren't exactly what most people would dub as direct competitors. Amazon is an e-commerce kingpin, and Google is primarily in the business of search and ads. However, now that Google is teaming up with Shopify, it becomes more apparent that the two tech juggernauts are, in fact, starting to duke it out for common ground.
Shopify: Even More to Gain
Shopify, whose shares rocketed on the Google news, likely has a lot more to gain out of the mutually beneficial partnership.
The Canadian company's incredible e-commerce platform has been enjoying profound momentum in recent years. Merchants have flocked to its ecommerce platform as a host for their online stores and payment processor. Consumers have followed suit, and in its corner of the e-commerce space, Shopify almost seems untouchable.
Shopify has given Amazon a good run for its money over the years, and you could say that it is one of few firms that has successfully fended off Amazon. Small-and-medium-sized business (SMB) storefront platform Amazon Webstore was forced to close up shop nearly six years ago. All the while, Shopify has continued improving upon its offering. Amazon has faced limited success in trying to cut in on Shopify's turf, but it may not be ready to surrender just yet.
With Amazon acquiring Shopify competitor Selz earlier this year, it's clear that Amazon is not going down without a fight. Should the Google-Shopify partnership pay off, perhaps the disruptor (Amazon) could stand to be disrupted.
Wall Street Weighs In
According to TipRanks’ analyst consensus rating, SHOP stock comes in as a Moderate Buy with 13 Buy and 9 Hold ratings assigned in the last three months.
As for price targets, the average analyst SHOP price target is $1491.10 per share, implying around 19.6% upside potential from current levels.
Both SHOP and GOOGL stock could show serious gains from this partnership. Shopify has already shown its mettle in its ability to stand firm in the face of Amazon's dominance. With its newly fortified position as a Google partner, Shopify has even greater potential to garner more eyeballs, translating into more sales and a more robust business overall.
Disclosure: Joey Frenette owned shares of Amazon.com Inc. at the time of publication.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.