“Shopify is benefiting from the trend toward e-commerce. But tariffs and margin forecasts also raise questions.
When small retailers have a great product and want to sell it online, they face major challenges. This includes setting up suitable online stores and the associated logistics. The Canadian company Shopify can help with this. The e-commerce software company's goal is to help people become independent by making it easier to start, run, and grow a business.
More than a decade ago, it all started with selling snowboards online. None of the solutions at the time gave the company founders the control they needed to succeed—so they developed their own. Today, companies of all sizes use Shopify, whether selling online, in retail stores, or on the go, while the success of these solutions has made Shopify one of Canada's most valuable companies, with a market capitalization of around $150 billion.
Today, Shopify is listed on the American stock exchange. Nasdaq listed the stock. The share price was last quoted at around $113. Since the beginning of 2025, the share price has increased by almost six percent, although the uncertainties surrounding the American tariffs are particularly affecting companies active in the retail sector. The stock is still a long way from the highs of almost $170 reached during the coronavirus crisis. During the coronavirus pandemic, exaggerations, particularly in online and e-commerce stocks, had led to significant price increases. However, Shopify shares had recently moved toward these highs.
Aside from the uncertainties surrounding the tariffs, Shopify has recently continued its growth trajectory, while management is increasingly focusing on profitability. While total revenue grew by 27 percent year-on-year in the first quarter of 2025, the free cash flow margin was 15 percent, marking the seventh consecutive quarter in double-digit percentage range. CEO Jeff Hoffmeister therefore stated that the first quarter would allow Shopify to demonstrate both high growth and profitability.
Furthermore, improvements would be achieved regardless of market conditions. However, Shopify is not immune to recent market uncertainties, as evidenced by the fact that the gross margin forecast for the just-ended second quarter was only 17 to 19 percent, while consensus estimates at the time were at 20.5 percent. Nevertheless, analysts were largely satisfied with the latest figures and outlook.
Wells Fargo analyst Andrew Bauch has an "Overweight" rating on Shopify shares and a price target of $125.00. This would currently represent upside potential of more than 10 percent. Although Shopify is not typically perceived as an artificial intelligence (AI) company, he believes that Shopify's AI efforts stand out from other companies and can serve as another important growth and efficiency driver in the coming years.
J.P. Morgan analyst Reginald Smith points out that Shopify's results for the first quarter of 2025 were "generally solid." The analyst says that Shopify's quarterly spending and merchant trends are stable despite tariff uncertainty.
In the past, investing in Shopify shares was a good deal. Anyone who had invested €10,000 ten years ago would now have a portfolio value of around €325 134. This corresponds to an average annual increase in value of more than 43 percent.” [1]
1. Eine Wachstumsgeschichte mit KI-Phantasie. Frankfurter Allgemeine Zeitung; Frankfurt. 04 July 2025: 28. Von Christoph A. Scherbaum
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