Fears of a coming recession are getting worse. Once the inverted yield curve -- a reliable predictor of looming economic troubles -- reared its ugly head, much of the investment community went into panic mode. Of course, no one knows when the next recession will come, but it isn't a bad idea to start purchasing stocks that could come out of one mostly unscathed. One stock that rarely gets mentioned as a safe haven in case of an economic downturn is Shopify Inc (NYSE: SHOP). That is in part because the tech industry isn't necessarily the best place to look for recession-proof stocks. But it is also true that the e-commerce giant has yet to experience a full blown recession as a publicly traded company. Despite the firm trouncing average market returns in recent years, it is natural to wonder how Shopify would fare in a recession.
An understanding of how Shopify makes most of its money will be helpful here. The Ontario-based company breaks down its revenues into two segments: subscription solutions and merchant solutions. The former of these consists of the basic recurring services and license fees the company offers merchants on its platforms. Merchant solutions can be described as Shopify's point of sale system; it accounts for transaction and payment processing fees, but also shipping fees, and more. Year to date, subscription solutions and merchant solutions make up 43% and 57% of Shopify's revenues, respectively.