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Economic Moat

Questions › Category: Business Quadrant › Economic Moat
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Angus Lou asked 2 years ago
Hi, In the video, you mentioned Shopify had switching costs and pricing power in one of the videos, In recent years, it has been reporting a decreasing downtrend of net income and EPS. Is the company losing its economic moat and competitive advantage?
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Victor Chng Staff answered 2 years ago

Hi Angus,

 

In most cases, when a company is losing its moat, you'll observe a decline in revenue. In Shopify's case, its revenue is still growing, which suggests they are not losing their competitive edge entirely. However, it seems they may be facing some cost pressures. It's important to note that Shopify operates in a highly competitive environment.