The BigCommerce (NASDAQ:BIGC) IPO was a huge success. Within two days, BigCommerce stock rallied more than 330% from its $24 IPO price, to a high of $104 in early August.

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Then the hype faded. BIGC stock dropped. From $104 … all the way to $70.

This near-term weakness won’t last.

In the long run, robust growth tailwinds in the e-commerce platform market coupled with BigCommerce’s favorable competitive positioning in that market will power significant revenue and profit growth at the company.

That significant revenue and profit growth will translate into significant gains for BigCommerce stock.

So, buy the dip in BIGC stock. This is a long-term winner, and today’s weakness will ultimately look like little more than a blip on the radar in five years.

Here’s a deeper look.

The Burgeoning E-Commerce Platform Market

To understand the long-term bull thesis on companies like BigCommerce and Shopify (NYSE:SHOP), you need to understand the bull thesis on the broader e-commerce platform market.

Long story short, all the big dogs in the retail world – like Walmart (NYSE:WMT), Target (NYSE:TGT) and Costco (NASDAQ:COST) – have already built out robust e-commerce platforms. Small retailers haven’t. As of 2018, around 40% of small businesses didn’t even have a website, mostly because e-commerce has remained relatively niche.

Not anymore.

Thanks to the novel coronavirus pandemic, consumer adoption of e-commerce has permanently accelerated. E-commerce is no longer niche. It’s everywhere and everything.

So, what you have started to see in 2020, is small and mid-sized businesses swarm to e-commerce. This trend won’t slow down. Over the next decade, it will accelerate, to the point where websites will become the new storefronts, in that every retailer will have one by 2030, and most retailers will be doing most of their business through them by then.

But, building a robust e-commerce operation isn’t easy. You have to build a website and optimize it from a design, sales and marketing perspective. You have to build out sales capability in social channels, leverage data to increase conversions, employ digital marketing campaigns to drive traffic, so on and so forth.

These small and mid-sized businesses are flocking to e-commerce platform companies, like Shopify and BigCommerce, to help them build strong e-retail businesses.

This flocking will remain vigorous over the next decade. As it does, the amount of money flowing through these e-commerce platforms – both subscription dollars and marketplace dollars – will soar.

BigCommerce Is a Strong Company in a Strong Market

For all intents and purposes, Shopify is the king of the e-commerce platform market. With 1.05 million merchants and $61 billion in gross merchandise value, Shopify is simply miles bigger than everyone else in the space.

But this isn’t a winner-take-all market.

Of all the small and mid-sized businesses that will rush into e-commerce platforms over the next decade, not all of them will choose Shopify, simply because there are other platforms out there that offer different features which may appeal more to different sellers.

The strongest of the “other guys” in this market is BigCommerce.

BigCommerce has a solid positioning in this market, powering 60,000-plus online stores as of June 2020. But, more importantly, BigCommerce has enough distinct advantages over Shopify in certain areas that the platform is a better option than Shopify for many sellers.

For example, BigCommerce features zero transaction fees, whereas Shopify takes a 0.5% to 2% commission off every transaction. Plus, BigCommerce has far more robust product listing options, more APIs, better multi-currency solutions, tiered pricing structures and more streamlined customer upload options.

To that end, BigCommerce is often a more attractive option than Shopify for many smaller sellers, international sellers, bulk discount sellers, retail shops with a ton of SKUs or personalized items, so on and so forth.

In other words, BigCommerce reasonably projects as a solid second-fiddle to Shopify in the burgeoning e-commerce platform market.

On that basis alone, BigCommerce stock looks like a compelling long-term buy.

BigCommerce Stock Has Upside Potential

BigCommerce has a $5 billion market cap. Shopify has a $120 billion market cap.

I’m not drawing this comparison to say that BigCommerce could one day be a $100+ billion company. It won’t be, partly because BigCommerce won’t ever have as many merchants as Shopify. And partly because BigCommerce doesn’t make any revenue off of marketplace sales, whereas that is Shopify’s biggest revenue stream.

But I am drawing this comparison to show that BIGC stock does have significant long-term upside potential.

BigCommerce powered 60,000 online stores as of June 2020. There are 7.1 million e-retailers in the world. So, BigCommerce powers about 1% of e-retail websites in the world today.

About 74% of small retailers don’t have an e-commerce enabled website. Thus, we can estimate the total number of retailers in the world at 27 million. By 2030, I think most of those retailers will have an e-commerce presence. If hat number’s 80%, the total e-retailer pool would be 22 million.

Let’s say BigCommerce maintains 1% market share. Total online stores powered by BigCommerce will measure 220,000 by the end of the decade.

Using 2019 numbers, BigCommerce made about $2,000 per year off of each one of its online stores.  That number will rise over time, thanks to price hikes and more bigger sellers on the platform (who have higher subscription price points). BigCommerce’s unit revenues could easily rise to $4,000 to $5,000 by 2030.

The math there implies nearly $1 billion in revenue by the end of the decade. Gross margins are around 75%. The opex rate should fall with scale towards an application software industry-average opex rate of 40%. So, you’re talking 35% operating margins, $350 million in operating profits, and potentially $280 million in 2030 net profits after taking out 20% for taxes.

Application software stocks typically fetch a 35x forward earnings multiple. A 35x multiple on $280 million in 2030 net profits implies a potential 2029 market cap for BIGC stock of nearly $10 billion.

That’s about double today’s market cap, with room for upside if BigCommerce expands market share in the e-commerce platform market.

Bottom Line on BIGC Stock

BigCommerce stock is a long-term winner.

Sure, the IPO hype didn’t last long. Don’t worry about that. This is all just near-term noise.

Let the hype fade. Let the traders flip the stock. Then, step in, buy the dip and hold for the long haul as secular e-commerce platform tailwinds push BIGC stock way higher in the long run.

Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long SHOP. 

Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long SHOP. 

Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he was long SHOP.