Shopify (SHOP) AI Stock Analysis

• Market Cap: C$229.24B
• Dividend Yield: N/A
• Average Volume (3M): 2.24M
• Price to Earnings (P/E): 166.9
• Beta (1Y): 2.32
• Revenue Growth: 33.71%
• EPS Growth: 28.57%
• Country: CA
• Employees: 8,100
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.65
• Shares Outstanding: 1,226,037,700
• 10 Day Avg. Volume: 2,061,966
• 30 Day Avg. Volume: 2,235,566
• PEG Ratio: -4.30
• Price to Book (P/B): 15.54
• Price to Sales (P/S): 17.78
• P/FCF Ratio: 102.37
• 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$223.93
• Price Target Upside: 27.40% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 34
• EPS Forecast (FY): 2.51
• Revenue Forecast (FY): C$19.99B

• Rating: 69 Neutral
• Price Target: C$170.00 ▼(-3.29% Downside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is anchored by strong financial performance (low leverage and robust free cash flow) and a constructive earnings-call backdrop around disciplined AI and international payments expansion. Offsetting these positives are weak technicals (broadly below major moving averages with negative momentum) and a demanding valuation (very high P/E with no dividend yield provided).

Positive Factors

Conservative balance sheet and low leverage

A very conservative balance sheet with sharply reduced debt and a large equity base provides durable financial flexibility. This supports multi-year investments in product, international expansion, or opportunistic M&A while lowering solvency risk and preserving capacity to weather cycles.

Strong and improving operating and free cash flow

Robust, improving operating and free cash flow is a lasting strength: it funds R&D, platform enhancements, and international rollouts internally, reduces reliance on external capital, and enables strategic optionality such as reinvestment or balance-sheet optimization.

Platform scale with expanding international payments footprint

Availability of Shopify Payments in 60 countries materially increases addressable merchant activity and monetizable volume. A broader payments footprint deepens ecosystem stickiness, aids localized expansion, and supports recurring merchant solutions revenue across geographies.

Negative Factors

Recent revenue growth deceleration

A meaningful slowdown in top-line growth reduces the pace at which merchant solutions and subscription revenue can scale. Slower revenue momentum can constrain margin expansion, lengthen payback on investments, and make multi-year growth targets harder to achieve without accelerated product adoption.

Historic earnings and margin volatility

Material year-to-year swings in profitability complicate planning and increase execution risk for long-term initiatives. Persistent margin volatility can impair confidence in sustainable operating leverage and force conservative capital allocation despite strong recent cash flows.

Execution and regulatory complexity around AI and payments expansion

Regional regulatory fragmentation and diverse payment rails create structural execution and compliance burdens that can slow international monetization. Coupled with AI rollout risks, these complexities can elevate costs, lengthen timelines, and risk merchant disruption if not carefully managed.

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 generates revenue primarily through subscription fees and transaction fees. Merchants pay a monthly subscription fee to use the platform, which varies based on the features and services they select. In addition to subscription revenue, Shopify earns transaction fees on sales made through its payment processing service, Shopify Payments. The company also offers additional services, such as Shopify Plus for enterprise-level businesses, which commands higher subscription fees due to its advanced features. Other revenue streams include merchant solutions like point-of-sale systems, shipping services, and third-party app integrations. Strategic partnerships with payment processors, shipping companies, and other service providers further enhance its offerings and contribute to its earnings.

Shopify Financial Statement Overview

Summary

Strong financial foundation driven by a conservative balance sheet (very low debt vs. equity) and robust, improving operating/free cash flow in 2024–2025. Profitability has recovered materially by 2025, but the score is tempered by historically volatile earnings/margins and a notable deceleration in revenue growth into 2025.

Income Statement

Revenue has scaled strongly over the past several years (from ~$2.9B in 2020 to ~$11.8B in 2025), though growth has decelerated recently (2025 revenue growth ~10% vs. ~26% in 2023–2024). Profitability has materially improved versus 2022’s deep loss, with 2025 showing solid operating profit (EBIT ~$1.9B) and net income (~$1.25B). However, earnings have been volatile year-to-year (notably the unusually high 2021 net margin and the large 2022 loss), which tempers the score despite the clear recovery.

Balance Sheet

The balance sheet appears very strong and conservatively levered. Total debt declined sharply by 2025 (to ~$0.36B) while equity is large (~$13.45B), supporting financial flexibility and lowering risk. Total assets have steadily increased over time, and leverage metrics in prior years were already modest, indicating the company can fund growth without heavy balance-sheet strain. The main watch item is that equity and returns have been uneven across the cycle, reflecting profitability volatility rather than balance-sheet weakness.

Cash Flow

Cash generation is a key strength. Operating cash flow and free cash flow are both robust and improving (2025 operating cash flow ~$2.07B; free cash flow ~$2.04B), with positive free cash flow growth in 2024–2025. Cash flow quality also looks solid in years where coverage metrics are provided (free cash flow closely tracks net income in 2023–2024). The primary weakness is historical volatility, including negative operating and free cash flow in 2022, but the subsequent rebound has been decisive.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	11.76B	8.88B	7.06B	5.60B	4.61B
Gross Profit	5.63B	4.47B	3.52B	2.75B	2.48B
EBITDA	1.96B	1.28B	-8.00M	-383.00M	3.21B
Net Income	1.25B	2.02B	132.00M	-3.46B	2.91B
Balance Sheet
Total Assets	15.16B	13.92B	11.30B	10.76B	13.34B
Cash, Cash Equivalents and Short-Term Investments	5.77B	5.48B	5.01B	5.05B	7.77B
Total Debt	358.35M	1.13B	1.15B	1.40B	1.17B
Total Liabilities	1.71B	2.37B	2.23B	2.52B	2.21B
Stockholders Equity	13.45B	11.56B	9.07B	8.24B	11.13B
Cash Flow
Free Cash Flow	2.04B	1.60B	905.00M	-186.00M	453.64M
Operating Cash Flow	2.07B	1.62B	944.00M	-136.00M	504.43M
Investing Cash Flow	-1.21B	-1.59B	-1.24B	-719.00M	-2.35B
Financing Cash Flow	-825.20M	61.00M	60.00M	18.00M	1.65B

Shopify Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 175.78
• 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 Neutral. The current price of 175.78 is above the 20-day moving average (MA) of 167.44, below the 50-day MA of 188.04, and below the 200-day MA of 193.16, indicating a neutral trend. The MACD of -1.32 indicates Negative momentum. The RSI at 50.69 is Neutral, neither overbought nor oversold. The STOCH value of 75.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:SHOP.

Shopify Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSG	72 Outperform	C$8.18B	43.26	10.60%	―	14.55%	15.55%
SHOP	69 Neutral	C$229.24B	166.89	10.02%	―	33.71%	28.57%
KXS	69 Neutral	C$3.96B	49.33	8.24%	―	15.11%	75.40%
CSU	62 Neutral	C$62.28B	68.43	22.10%	0.17%	18.24%	7.72%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
OTEX	59 Neutral	C$8.71B	12.20	10.88%	3.27%	-5.01%	13.21%
LSPD	56 Neutral	C$1.76B	-12.26	-37.01%	―	17.23%	-435.45%