Kevin O'Leary explains why investors should own both Amazon and Shopify

Published Wed, Jul 15 20202:58 PM EDT

Kevin Stankiewicz @in/kevin-stankiewicz-b5593466 @kevin_stank

(This story is for CNBC Pro subscribers only.) Investors should own the stocks of both Amazon and Shopify , Kevin O'Leary said Wednesday, citing his experience working with the platforms through his "Shark Tank" companies. "This is the new emerging market for small business in America, and you need to own it," O'Leary said of Shopify on CNBC's "Halftime Report." "I love Amazon, but I love, love, love Shopify,." Shopify and Amazon are both long-term beneficiaries of the shift toward online retail — a trend that's only been accelerated by the coronavirus pandemic despite its general economic havoc. Many storefronts were forced to shutter to slow the spread of Covid-19, so consumers who wanted to shop had to do so on the internet . Shopify's stock has risen more than 170% from its closing price of $346 on March 16, around the time the U.S. coronavirus outbreak was starting to intensify. Shares were trading around $950 on Wednesday. Likewise, Amazon has been on a tear. Its stock has risen to more than $3,000 per share from its closing price of $1,807 on March 16 — a gain of about 66%. But O'Leary, a "Shark Tank" investor, said people do not have to choose only of the two companies to add to their portfolio. While both play in the e-commerce space, they serve different functions for small businesses, he said. Many small businesses were already selling their products on Amazon, and it's proven incredibly valuable to find customers, O'Leary said. Across his portfolio of over 50 companies, Amazon accounts for about 40% of sales, O'Leary said. "They're very important." But he said Shopify offers a fresh layer of value because it provides small businesses with the software to sell directly to customers on their own websites. "If you had a store in Nashville, Tennessee, and it's closed now, you go to Shopify and the reason you do that instead of putting more demand on Amazon distribution [is] Amazon has morphed into another retailer where margins are close to 50% only," explained O'Leary. It's a different story for small businesses when they grow sales using Shopify's platform, O'Leary said. "For every incremental dollar I can do on Shopify, I'm getting almost 100% gross margin. They're the anti-Amazon," he said, noting that small businesses gain more control over the branding on a package when a transaction is completed using Shopify's platform versus through Amazon. And for investors, O'Leary touted Shopify's partnerships with companies such as Facebook and Walmart as strategic ways for the company to expand its reach to more small businesses. "They can exist together," O'Leary said of Amazon and Shopify. Disclosure: CNBC owns the off-network rights to "Shark Tank," on which Kevin O'Leary is a co-host.

Kevin O'Leary

Scott Mlyn | CNBC

(This story is for CNBC Pro subscribers only.)

Investors should own the stocks of both Amazon and Shopify, Kevin O'Leary said Wednesday, citing his experience working with the platforms through his "Shark Tank" companies.

"This is the new emerging market for small business in America, and you need to own it," O'Leary said of Shopify on CNBC's "Halftime Report." "I love Amazon, but I love, love, love Shopify,."