Shopify being bought up by IPO Investors

One of the “billion dollar unicorns” will be hitting the market this week when Shopify (NYSE: SHOP) makes its debut on Thursday.

Shopify is No. 63 on Fortune.Com’s Unicorn list with a $1.0b valuation after venture capitalist bought into a $100m round back in December 2013. After gaining that valuation, the company’s chief product officer, Harley Finkelstein, told TechCrunch:

“There’s kind of this concept that the future of retail is online versus offline, or just online. We don’t actually believe that; what we believe is that the future of retail is all about consumer choice.”

The company originally ‘filed’ for IPO on April 14 and wasted no time in bringing terms to the table in early May.  The underwriters adjusted terms with an increased range and now will seek a raise of up to $123.2m if priced at the high-end ($16). That pricing, combined with a little more than 66 million shares outstanding would give ‘SHOP’ a $1.07b valuation. But the overwhelming demand for this deal from our sources reveal that this will open to trade with a much higher market cap.

“This deal is exponentially over-subscribed,” Scott Sweet, managing partner at IPOBoutique.Com said.  “This company’s explosive growth and the rate at which Shopify is narrowing its losses are two key factors driving demand.”

Looking at the particulars in the financials, it is impressive numbers:

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Revenues have more than doubled each year. In the three months ended March 31, 2015 as compared from March 31, 2014…net losses have decreased from $6.4m to $4.5m.

Additionally, the company is still heavily investing in itself as they have put in more than $70m in research, development and marketing in 2014 alone.

Shopify has merchants in more than 150 countries and are aggressively looking at attacking the United States. Going public with this type of demand and attention they will get by going public on the NYSE certainly wont hurt.

Naturally, the street is rushing to draw comparisons and one of the first is a comp to recent IPO Etsy (NYSE: ETSY) who debuted with a 94% premium and 15 points above the $16.00 pricing.

Additionally, Shopify has backing from some of the prominent VC players out there and that certainly won’t hurt this company going forward.