Shopify (SHOP) AI Stock Analysis

• Market Cap: C$141.68B
• Dividend Yield: N/A
• Average Volume (3M): 2.67M
• Price to Earnings (P/E): 50.7
• Beta (1Y): 2.37
• Revenue Growth: 27.85%
• EPS Growth: 1400.97%
• Country: CA
• Employees: 8,100
• Sector: Technology
• Sector Strength: 40
• Industry: Software - Application
• EPS (TTM): 2.16
• Shares Outstanding: 1,215,528,100
• 10 Day Avg. Volume: 2,605,148
• 30 Day Avg. Volume: 2,673,517
• PEG Ratio: 0.04
• Price to Book (P/B): N/A
• Price to Sales (P/S): 15.08
• Price to Cash Flow (P/CF): 54.40
• P/FCF Ratio: 54.40
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$188.86
• Price Target Upside: 72.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 34

Shopify's strong financial performance and strategic growth initiatives are major positives, supporting a high overall stock score. However, the high valuation poses risks if growth expectations are not met. Technical analysis suggests mixed short-term momentum, and the recent NYSE listing enhances market visibility. Overall, Shopify's robust financial health and strategic focus on growth position it well in the software industry, despite some valuation concerns.

Positive Factors

Growth and Market Performance

Shopify is delivering U.S. growth at twice the rate of U.S. eCommerce and multiples higher than that in Europe.

Revenue and Financial Performance

Shopify reported solid Q4 2024 results, with strength across key growth initiatives, regions, and merchant sizes driving Q4 outperformance.

Technological Advancements

The ability to pair a best-in-class online tech stack with what is now believed to be a best-in-class offline tech stack is a powerful combination.

Negative Factors

Subscription Revenue Challenges

MRR of $178M was modestly below the $182M consensus due to the transition from 1-month paid trials to 3-month trials, which is expected to be a headwind to subscription revenue in H1 2025.

Valuation Concerns

The recent share price appreciation already reflects some of this upside, and shares are seen as fairly valued.

Shopify Business Overview & Revenue Model

Company Description

Shopify Inc., a commerce company, provides a commerce platform and services in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, 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 fulfillment, 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.

How the Company Makes Money

Shopify makes money primarily through two main revenue streams: subscription solutions and merchant solutions. Subscription solutions generate revenue from monthly subscription fees charged to merchants for access to Shopify's online platform, which offers various tiers of service with different features. Merchant solutions generate revenue from additional services provided to merchants, such as payment processing through Shopify Payments, point-of-sale systems, and other value-added services like Shopify Shipping and Shopify Capital. These solutions benefit from Shopify's partnerships with financial institutions, logistics providers, and technology partners, which help to enhance the service offerings and drive further monetization opportunities.

Shopify Financial Statement Overview

Summary

Shopify demonstrates strong financial performance with significant revenue and profit growth. The income statement reflects efficient cost management and operational efficiency, with a notable net profit margin of 22.73%. The balance sheet shows conservative leverage and a strong capital structure, supported by low debt and high equity. Cash flow generation is robust, with a substantial growth rate and efficient cash conversion. Overall, Shopify's financial health is impressive, though maintaining this trajectory requires strategic focus.

Income Statement

Shopify's income statement shows strong performance with a notable revenue growth rate of 25.78% from 2023 to TTM. The gross profit margin is robust at 50.31%, indicating efficient cost management. The net profit margin has significantly improved to 22.73% in TTM, showcasing enhanced profitability. EBIT and EBITDA margins are healthy at 12.11% and 13.56%, respectively, reflecting solid operational efficiency. The growth trajectory and profitability metrics signal a strong competitive position in the software industry.

Balance Sheet

The balance sheet reflects a solid financial position with a low debt-to-equity ratio of 0.10, indicating conservative leverage. Return on equity is impressive at 17.47%, showing effective use of equity to generate profits. The equity ratio stands at 83.00%, highlighting a strong capital structure. Overall, Shopify's balance sheet stability is supported by ample cash reserves and minimal debt, although the high stockholders' equity may limit flexibility in capital allocation.

Cash Flow

Shopify's cash flow statement highlights strong cash generation capabilities, with a substantial free cash flow growth rate of 76.48% from 2023 to TTM. The operating cash flow to net income ratio is 0.80, and the free cash flow to net income ratio is 0.79, indicating efficient cash conversion. Despite robust cash flows, the company should maintain vigilance over capital expenditures and investment activities to sustain this momentum.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
8.88B	7.06B	5.60B	4.61B	2.93B
	Gross Profit
4.47B	3.52B	2.75B	2.48B	1.54B
	EBIT
1.07B	260.00M	-822.30M	268.64M	90.15M
	EBITDA
1.07B	-8.00M	-383.00M	334.95M	160.21M
	Net Income Common Stockholders
2.02B	132.00M	-3.46B	2.91B	319.51M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
5.48B	5.01B	5.05B	7.77B	6.39B
	Total Assets
13.92B	11.30B	10.76B	13.34B	7.76B
	Total Debt
1.13B	1.15B	1.40B	1.17B	912.89M
	Net Debt
-372.00M	-263.00M	-252.72M	-1.33B	-1.79B
	Total Liabilities
2.37B	2.23B	2.52B	2.21B	1.36B
	Stockholders Equity
11.56B	9.07B	8.24B	11.13B	6.40B
Cash Flow		Free Cash Flow
1.60B	905.00M	-186.47M	453.64M	382.96M
	Operating Cash Flow
1.62B	944.00M	-136.45M	504.43M	424.96M
	Investing Cash Flow
-1.59B	-1.24B	-718.57M	-2.35B	-1.93B
	Financing Cash Flow
61.00M	60.00M	17.55M	1.65B	3.56B

Shopify Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 109.42
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SHOP, the sentiment is Negative. The current price of 109.42 is below the 20-day moving average (MA) of 139.00, below the 50-day MA of 155.16, and below the 200-day MA of 127.40, indicating a bearish trend. The MACD of -3.61 indicates Negative momentum. The RSI at 40.03 is Neutral, neither overbought nor oversold. The STOCH value of 34.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:SHOP.

Shopify Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SHOP	72 Outperform	C$141.68B	50.69	19.58%	―	27.85%	1400.97%
KXS	68 Neutral	C$4.59B	157.81	-0.10%	―	14.85%	-105.25%
LSPD	59 Neutral	C$1.71B	―	-5.18%	―	23.95%	39.68%
Sector *	57 Neutral	$18.57B	9.42	-13.42%	2.72%	5.01%	-23.43%
BB	54 Neutral	$2.64B	―	-7.59%	―	-31.15%	30.02%
REAL	51 Neutral	C$417.41M	51.13	5.27%	―	12.27%	―
DOO	48 Neutral	$3.68B	19.66	-3.01%	1.72%	-23.54%	-130.34%

Shopify Corporate Events

Shopify to Transfer U.S. Stock Listing to Nasdaq

Shopify Inc. announced its decision to transfer its U.S. stock exchange listing from the New York Stock Exchange (NYSE) to the Nasdaq Global Select Market. This strategic move is expected to take effect with the last trading day on the NYSE being March 28, 2025, and the first trading day on Nasdaq being March 31, 2025. The transfer aims to align Shopify with Nasdaq’s technology-focused market, potentially enhancing its visibility and appeal among tech-focused investors. The company’s listing on the Toronto Stock Exchange will remain unchanged, and the stock will continue to trade under the ticker symbol ‘SHOP’.

Shopify’s Class A Shares Now Trading on NYSE

Shopify has reported a significant update concerning its operations, with its Class A Subordinate Voting Shares being traded on the New York Stock Exchange under the ticker symbol ‘SHOP’. This development is expected to enhance Shopify’s visibility in the financial markets and potentially attract more investors, solidifying its position as a key player in the e-commerce sector.