Shopify Vs Slack Stock: Asset-light models seem like ideal investment opportunities these days.
Take Software-as-a-Service (SaaS) platforms, for instance, like Shopify and Slack. Both enjoy huge customer bases and consistently invest in growth. But these services are two different animals – Shopify makes for easy ecommerce operations, while Slack’s aim is basically to end email as we know it.
Since its initial public offering (IPO), Shopify has turned countless investors turned millionaires. On the flip side, Slack dropped after its IPO and hasn’t seen any gains of real significance yet. That could mean Shopify has run its course and Slack is a bargain still, or perhaps the existing trends will persist.
Which reality will come to pass? In short, when comparing Slack vs Shopify, which is best?
Pros and Cons of Investing in Hot Stocks
Hot stocks like Shopify and Slack are highly sought after by investors not least due to rapid growth projections. But fast growth comes at a cost.
After all, when the market boomed in the late 90s, the hot stocks of the day were in the tech and telecommunications sectors. Many went up in smoke during the 2000-02 bubble and bust.
Investing in hot stocks is generally lucrative during boom times – but if what we’ve experienced so far with market fluctuation from the coronavirus pandemic is any indication – the bottom can always fall out at any time and for any industry.
So if you’re to consider buying a hot stock like Slack or Shopify, the devil lies in the financial details.
Is Slack Stock a Buy?
Both Slack and Shopify are currently capitalizing on the same intangible benefit – more people are still at home right now. Whether shopping or working, this concentration of consumers in one place, so to speak, is a good thing for these sectors.
Slack’s daily movements have been rather bullish while, at the same time, knowing that reopening the economy may not go as smoothly as intended.
For companies that realize that working from home could very well become our new “normal”, they’ll continue to grow and see success. It could not only allow companies to boost their bottom lines – which benefits investors, too – but could also allow for pay raises for employees. More than likely, the first option is the safer.
Also, employees could see higher job satisfaction if allowed to continue working from home – and it’s services like Slack that could benefit. Employees can work remotely yet managers can easily keep tabs and communicate in real-time with them.
When it comes to Slack’s valuation, upside exists. The company could potentially enjoy growth of 25% to 30% by Q4 earnings.
On the technical side, we remember Slack’s February uptick. While Slack’s latest uptick isn’t quite as strong, it’s been steady nonetheless and shows signs of gradual growth – even if it doesn’t exactly jive with the current strength of the overall market.
In the end, this strength could prove to catapult Slack even higher than analysts are projecting. So, is another breakout like February on the horizon? That remains to be seen, but if the stock continues to hold and doesn’t drop below $30 per share, the odds favor a continued march higher.
If not, it’s uncertain if the company could recover. All in all, the current standing says this could potentially make for a good investment.
Should You Invest in Shopify?
Shopify offers every software tool a budding or well-established business could possibly need when running an online store.
In fact, Shopify is so incredible that, no matter where you are or how large your organization, you can run the whole shebang from your smart phone.
The e-commerce solution Shopify’s Q1 earnings were so strong they caused the company’s stock to reach an all-time high topping out at $700. But this incredible Q1 report is set to do a lot more.
It truly appears Shopify is in the middle of their butterfly moment – where they become the ecommerce solution spine for small and medium-size businesses around the world.
Whether it’s to do with the shape of business and the coronavirus outbreak or Shopify’s ability to pivot with ease, some analysts estimate that Shopify could reach prices of $1,000 per share or more in the coming year or so.
Does this mean you should chase the rallying trends? Maybe not. Chasing trends pays off sometimes – other times, it can spell disaster. At some point, Shopify might hit a wall. If that happens, their stock will inevitably drop.
That said, if you’re the investor with multiple years on your timeline, Shopify is probably a good stock to have in your portfolio. As far as growth is concerned, Shopify is one of – if not the one – stock that has a lot of potential upswing left.
Shopify Vs Slack Stock: The Bottom Line
There’s no denying it – both of these SaaS stocks are valued highly. Perhaps so highly it actually might make an investor stay away and simply monitor. Neither company is really profitable, so let’s take a look at their respective price-to-sales ratio.
Slack’s ratio equates to 20 – Shopify’s to a risky 50. But, that said, investors know that these – and all stocks, really – pose some inherent risk.
Shopify depends heavily on entrepreneurs and other small businesses that, with any type of extensive recession, could really bite the bullet. Slack’s competitors have been around as long as the internet itself, so trying to dethrone longstanding companies could prove nearly impossible to all but Microsoft Teams.
Of the two SaaS providers, Shopify is more established, has fantastic current momentum, and is much closer to being profitable.
The same cannot be said about Slack. It’s too early in Slack’s publicly traded history to tell whether this company will flourish or fall by the wayside – and their future is less than certain.
Shopify stands as the winner here and could provide an investor with better returns.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.