Q: Shop has an extremely high churn rate.
That means that they cannot retain their customers.Many businesses try Shopify but throw in the towel after a while as its not customers friendly.
With higher fees the churn rate will even be higher.
Why does nobody see this and you do not mention it either.
This will go the way of Nortel eventually?
SHOP has a high churn because literally anyone can set up a merchant account. Trial accounts are only $1 per month. Of course, not all accounts are successful, so those that fail leave. But everyday new accounts come in. At the end of it all, SHOP has 4.4M online accounts which process more than $80B in transactions. We mentioned churn, but agree with the company that its recent price increase is not likely to see most paying customers leave the system. Investors like to compare SHOP with Nortel since they were both once Canada's biggest companies. But Nortel was essentially a fraud with fake sales. Debt also killed Nortel and SHOP has no debt and lots of cash. We think comparisons between the two make no sense at all.