Shopify (SHOP) AI Stock Analysis

• Market Cap: $150.70B
• Dividend Yield: N/A
• Average Volume (3M): 3.06M
• Price to Earnings (P/E): 53.9
• Beta (1Y): 2.39
• Revenue Growth: 27.85%
• EPS Growth: 1400.97%
• Country: CA
• Employees: 8,100
• Sector: Technology
• Sector Strength: 63
• Industry: Software - Application
• EPS (TTM): 0.63
• Shares Outstanding: 1,215,528,100
• 10 Day Avg. Volume: 3,858,793
• 30 Day Avg. Volume: 3,055,714
• PEG Ratio: N/A
• 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: 1.27
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 42.89
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $169.42
• Price Target Upside: 25.80% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 37

Shopify's strong financial performance, evidenced by robust revenue growth and solid balance sheet, is a key strength. The positive earnings call further supports the company's growth trajectory and market confidence. Technical indicators are mixed, with some caution warranted due to high valuation metrics. Overall, Shopify is well-positioned for continued growth, but investors should remain aware of valuation risks and market conditions.

Positive Factors

Business Growth

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

Revenue Performance

Shopify delivered another strong top and bottom-line quarter with impressive underlying cohort momentum showcasing still expanding flywheel effects.

Negative Factors

Stock Valuation

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

Subscription Revenue

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.

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 a subscription-based model and additional merchant solutions. Subscription Solutions form a significant revenue stream, offering various pricing tiers with different levels of service and features for businesses using its platform. These plans range from basic packages for small businesses to advanced options for larger enterprises. Merchant Solutions represent another critical revenue source, encompassing fees from payment processing via Shopify Payments, transaction fees, and additional services like shipping and fulfillment. Shopify also generates income from its app store, where developers sell plugins and integrations to enhance store functionality, and from partnerships with third-party providers, which expand its ecosystem and service offerings.

Shopify Financial Statement Overview

Summary

Shopify demonstrates strong financial performance with robust revenue growth, improved profit margins, and a solid balance sheet. Revenue growth of 25.78% and high profit margins indicate efficient operations. A low debt-to-equity ratio and strong cash flow support a positive financial outlook despite the need for careful capital allocation.

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: Positive
• Last Price: 134.67
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:SHOP, the sentiment is Positive. The current price of 134.67 is above the 20-day moving average (MA) of 122.96, below the 50-day MA of 141.50, and above the 200-day MA of 129.47, indicating a neutral trend. The MACD of -4.23 indicates Negative momentum. The RSI at 54.43 is Neutral, neither overbought nor oversold. The STOCH value of 88.93 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:SHOP.

Shopify Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SHOP	77 Outperform	$150.70B	53.92	19.58%	―	27.85%	1400.97%
KXS	68 Neutral	C$5.08B	157.81	-0.10%	―	14.85%	-105.25%
LSPD	63 Neutral	C$2.17B	―	-5.18%	―	23.95%	39.68%
Sector *	59 Neutral	$10.73B	10.11	-6.65%	3.02%	7.41%	-11.17%
REAL	51 Neutral	C$453.67M	55.58	5.27%	―	12.27%	―

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.