Shopify Inc. lost one of its longtime supporters after Mawer Investment Management’s Vijay Viswanathan said he exited the stock over concerns about rising competition and risks in e-commerce. 

Ottawa-based Shopify became Canada’s most valuable public company during the pandemic, soaring above US$200 billion in market value, but the stock has plummeted 75 per cent this year. 

Mawer first invested in the e-commerce software provider in 2017, two years after it went public, and later trimmed its position as the stock went up, Viswanathan said. But the business of e-commerce is getting “crowded,” he said, citing a move by Inc. to combine payment and fulfillment services and make them available on other websites -- a direct encroachment on Shopify’s turf. 

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“Amazon is making their foray with their ‘Buy With Prime’ piece. We’re seeing a slowdown in e-commerce, and we’re seeing a slowdown in the results at Shopify. It became harder and harder to justify the valuation,” Viswanathan said on a Mawer podcast. 

In May, Shopify announced the largest acquisition in its history, a US$2.1 billion deal for delivery startup Deliverr Inc. Viswanathan said he thinks Shopify may have spent too much.

“They made a pretty expensive acquisition in our estimation,” he said. “It may work out great for them, but essentially moving into fulfillment. That probably increases the risk as they have to get that right in order to continue to compete.”

Mawer clients made four to five times their money on the Shopify investment, said Viswanathan, who’s director of research and lead manager of the Mawer Canadian Equity Strategy. 

“We still think it’s a good business or a very good business that’s well-run,” he said. “One day it may be back in the portfolio.”