Shopify SHOP shares have surged 20.7% year to date, outperforming the Zacks Computer and Technology sector’s appreciation of 3% and the Zacks Internet – Services industry’s decline of 0.1%. 

Since the fourth-quarter 2024 results reported last Tuesday (Feb. 11), Shopify stock has appreciated 7%. The company reported impressive results for fourth-quarter 2024 non-GAAP earnings of 44 cents per share, in line with the Zacks Consensus Estimate. The figure jumped 29.4% year over year. Revenues of $2.81 billion surpassed the Zacks Consensus Estimate by 3.26%. The top line soared 31.2% year over year.

Shopify has been benefiting from robust growth in its merchant base, driven by its merchant-friendly tools like Shop Pay, Shopify Pay Instalments, Sign in with Shop and the Shop App. These innovative offerings are enabling Shopify to attract new merchants, even amid challenging economic conditions.

Gross Merchandise Volume (GMV) in the fourth quarter was $94.46 billion, which increased 25.7% year over year. Same-store sales growth from existing merchants, particularly Plus merchants, a higher number of merchants on SHOP’s platform and strong international growth drove GMV in the reported quarter.

SHOP Stock’s Performance

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SHOP’s Latest Updates Aim to Boost Merchant Base

Shopify’s latest updates have brought more than 150 new features to its platform to enhance merchants’ businesses, making operations smoother and more efficient. These updates are empowering merchants on the SHOP platform with innovative tools to streamline operations and grow their businesses.

Companies and brands like Reebok, Champion, Westwing and BarkBox are now available on Shopify. The company is expanding its footprint across verticals, including apparel and accessories, as well as health and beauty. SHOP is expanding in Europe with the addition of brands like Karl Lagerfeld and FC Barcelona.

Shop Pay is benefiting from strong adoption. In fourth-quarter 2024, Shop Pay processed $24 billion of GMV, up 50% year over year, reflecting strong merchant base expansion. Shop Pay Commerce is expanding with new enterprise retailers signing large shoe brands Aldo, Sperry and Call It Spring in the fourth quarter of 2024. GMV from Shop Pay Commerce surged roughly 20 times in 2024.

Shop Pay app is benefiting from a more personalized and fresh shopping feed, new curated shopping events and category browsing, and the launch of cart syncing.

Shopify plans to increase its AI capabilities, which will help not only new merchants launch but also help larger merchants scale faster and drive productivity. SHOP plans to continue to expand its reach across various merchant sizes, including entrepreneurs and enterprises and strengthen its footprint across Europe and countries like Japan.

A Rich Partner Base Aids SHOP’s Prospects

SHOP continues to benefit through its partnerships with prominent names like TikTok, Instagram, Target, PayPal PYPL, Roblox, Alphabet, Manhattan Associates, Oracle, COACH and Adyen. 

Through its expanded partnership with PayPal, SHOP is diversifying its Payments product offerings. With Alphabet’s YouTube, SHOP has provided its merchants with a powerful sales channel, leveraging YouTube creators to tap into its massive global audience.

In its commerce integration partnership with Roblox, Shopify has opened newer avenues for merchants to reach a younger and more engaged audience.

SHOP’s 2025 Earnings Estimates Show Downward Trend

The Zacks Consensus Estimate for SHOP’s 2025 earnings is currently pegged at $1.48 per share, down a couple of cents over the past 30 days and indicating year-over-year growth of 13.85%.

The consensus mark for SHOP’s 2025 revenues is currently pegged at $10.86 billion, indicating year-over-year growth of 22.3%.
 

SHOP beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 22.08%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

SHOP Stock: Buy or Hold?

SHOP is benefiting from strong growth in its merchant base and expanding footprint. Its focus on improving its client base is a key catalyst. Strong growth prospects justify a premium valuation.

SHOP shares are currently trading above the 50-day and 200-day moving averages, indicating a bullish trend.

SHOP Shares Trading Above 50-Day & 200-Day SMA

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However, SHOP’s Value Score of F suggests a premium valuation at the moment. 

In terms of the 12-month Price/Sales, SHOP is currently trading at 14.88X, compared with the broader sector’s 6.66X.

Price/Sales Ratio (F12M)

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Stiff competition has been a headwind. Shopify plans to shift to a three-month paid trial in certain markets compared with its previous one-month paid trial practice to boost merchant durability and retention. This negatively impacted fourth-quarter MRR growth and the first-quarter 2025 and second-quarter 2025 MRR’s.

Shopify plans to invest more in core platforms, international, and B2B enterprise and offline, which is expected to hurt free cash flow margins in the near term.

Shopify currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable time to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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