Amplitude (NASDAQ:AMPL) and Shopify (NYSE:SHOP) Critical Analysis

Amplitude (NASDAQ:AMPL) and Shopify (NYSE:SHOP) are both business services companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Valuation and Earnings

This table compares Amplitude and Shopify’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Amplitude	$276.28 million	4.28	-$90.36 million	($0.78)	-12.59
Shopify	$7.06 billion	12.86	$132.00 million	$0.09	783.98

Shopify has higher revenue and earnings than Amplitude. Amplitude is trading at a lower price-to-earnings ratio than Shopify, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Amplitude and Shopify’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Amplitude	-32.71%	-27.73%	-18.78%
Shopify	1.87%	4.48%	3.52%

Insider and Institutional Ownership

73.2% of Amplitude shares are owned by institutional investors. Comparatively, 69.3% of Shopify shares are owned by institutional investors. 28.7% of Amplitude shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Amplitude and Shopify, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Amplitude	1	5	0	0	1.83
Shopify	3	18	15	0	2.33

Amplitude presently has a consensus price target of $11.50, suggesting a potential upside of 17.11%. Shopify has a consensus price target of $78.30, suggesting a potential upside of 10.98%. Given Amplitude’s higher possible upside, research analysts clearly believe Amplitude is more favorable than Shopify.

Volatility & Risk

Amplitude has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, Shopify has a beta of 2.22, suggesting that its share price is 122% more volatile than the S&P 500.

Summary

Shopify beats Amplitude on 11 of the 14 factors compared between the two stocks.

About Amplitude

Amplitude, Inc., together with its subsidiaries, provides a digital analytics platform that analyzes customer behavior in the United States and internationally. It offers Amplitude Analytics, which provides real-time product data and reconstructed user visits; Amplitude Experiment, a solution that allows teams to test new capabilities and safely roll out new features; Amplitude CDP, an insight-driven solution that encompasses the data infrastructure, audience management, and data streaming capabilities; and Amplitude Session Replay used by product, marketing, and data teams to understand user behavior, diagnose product issues, and improve product outcomes. The company also provides customer support services related to initial implementation setup, ongoing support, and application training. It delivers its application over the Internet as a subscription service using a software-as-a-service model. The company was formerly known as Sonalight, Inc. and changed its name to Amplitude, Inc. in December 2014. Amplitude, Inc. was incorporated in 2011 and is headquartered in San Francisco, California.

About Shopify

Shopify Inc., a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, Australia, China, and Latin America. The company's platform enables merchants to displays, manages, markets, and sells its products through various sales channels, including web and mobile storefronts, physical retail locations, pop-up shops, social media storefronts, native mobile apps, buy buttons, and marketplaces; and enables to manage products and inventory, process orders and payments, fulfill and ship orders, new buyers and build customer relationships, source products, leverage analytics and reporting, manage cash, payments and transactions, and access financing. It also sells custom themes and apps, and registration of domain names; and merchant solutions, which include accepting payments, shipping, and securing working capital. The company was formerly known as Jaded Pixel Technologies Inc. and changed its name to Shopify Inc. in November 2011. Shopify Inc. was incorporated in 2004 and is headquartered in Ottawa, Canada.