We’ve witnessed some truly monumental moves in the stock market this year that continue to defy expectations. Whether it’s rallying from the fastest market crash ever to reach new all-time highs in a matter of months or IPO stocks roaring higher on speculative action seemingly every week, it’s safe to say that there is a lot to do in today’s market. One of the big themes has been the rise of e-commerce and how a permanent shift in the way that people shop has transformed the global retail space. Look no further than stocks like Shopify (NYSE:SHOP) and Amazon (NASDAQ:AMZN) to see just how valuable the market deems the e-commerce industry.
There’s a new e-commerce software company that recently turned down a $1.5 billion buyout offer from Intuit and instead opted to IPO. It seems like that decision has paid off nicely, as the stock has jumped over 400% since its IPO debut and continues to head higher. We’re talking about BigCommerce Holdings Inc (NASDAQ:BIGC), an e-commerce company that could become a household name sooner than you think. Let’s take a deeper look at BigCommerce below and determine whether or not it’s worthy of adding to your portfolio at this time.
What Does BigCommerce Do?
We know that e-commerce is a massive industry that continues to grow at a rapid pace, which is why companies like BigCommerce have so much potential. It offers a software-as-a-service (SaaS) e-commerce platform that helps merchants build and grow their businesses online. In the digital age, the ability to create engaging online stores that can attract customers and efficiently handle payment processing is vital for companies of any size. BigCommerce’s platform makes that possible and helps small businesses reach customers all over the world without having to build a website or online store all by themselves.
You might be thinking that BigCommerce’s business model seems very similar to Shopify, another stock that has been on a tear this year. While there are several similarities, BigCommerce is unique in that it rates better with search engine optimization, B2B selling, and international selling. It also features zero transaction fees instead of the 0.5% to 2% commission that Shopify charges on every transaction. BigCommerce is much smaller than Shopify, but there’s no reason to think that both of these companies can’t flourish going forward. It’s also worth mentioning that BigCommerce already has several high-profile brands that are using its platform to operate their online stores including Ben & Jerrys, Camelbak, Gillette, Clarks, and Skullcandy.
BigCommerce Positive Headlines Sent Shares Soaring
BigCommerce was in the news earlier this week as it announced that its e-commerce checkout service is going to be added to Facebook’s (NASDAQ:FB) popular Instagram application. The stock is up over 80% since the announcement and clearly shows how favorable the news is for the company going forward. Anytime a company announces something like this, it can often be a “sell the news” event, but the share price has held the gains thus far since the headline.
This integration is great news for BigCommerce for a few reasons. Instagram is one of the most popular applications in the world with over 1 billion monthly active users. BigCommerce merchants will be able to easily have their e-commerce storefront’s catalog connected to Instagram and provide customers with the opportunity to buy directly on Instagram instead of having to navigate their way over to the brand’s website. We know how important accessibility is in today’s highly competitive digital space. By offering a streamlined checkout experience on Instagram, merchants will be able to drive revenue growth and make additional sales without the potential of losing clients that were previously forced to take an extra step and head over to the merchant’s website.
BigCommerce On Watch for Now
While BigCommerce has been a compelling success story so far throughout its first month of trading, there are some additional things investors should know about the company before they consider adding shares. BigCommerce was unprofitable in 2019 and Q1 2020. It was also only able to generate $112 million in revenue in 2019. Although the pandemic and recent IPO has likely increased revenue for the company, after the recent rally the stock might need to cool off and consolidate for a bit.
There’s no doubt that BigCommerce could see huge growth in the coming years, which means it’s a great stock to have on your radar going forward. However, investors might be better off waiting for the company’s next earnings report release to learn more about how it is doing financially before buying. Keep in mind that the stock is up over 400% from its IPO price of $24 per share. BigCommerce will release its Q2 earnings on September 9h after market close, so make sure to listen in to the conference call if you are interested in the company.
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