Soaring Shopify Shares: Is It Still Worth Investing in the Stock Now?
Shopify, the Canadian e-commerce giant, has been making waves in the market with its recent developments and financial performance. In a move to bolster its platform, the company has added several large brands, including Starbucks, Canada Goose, Signet Jewelers, and Boart Longyear, a global leader in mining and drilling services.
Over the past 12 months, institutional investors such as mutual funds, hedge funds, and pension funds have shown interest in Shopify, although specific institution names and exact dates require access to detailed financial filings and reports.
Despite the ongoing tariff issues, Shopify has not seen any major changes in demand or buyer behavior. However, many of its merchants have had to raise prices due to tariffs, a trend that continues to impact the e-commerce industry.
Shopify's forecast for the third quarter is promising, with the company expecting revenue growth at a mid-to-high twenties percentage rate, above analysts' forecasts. This growth is attributed to several factors, including the expansion of Shopify Payments into 60 new countries this year, with multi-currency support now available in 20 countries.
The company's revenue continues to come predominantly from the U.S. and Canada, with 68% of its revenue coming from these regions. However, Shopify continues to expand internationally, particularly in Europe, where it has seen a 49% increase in GMV.
Shopify's Universal Cart is another significant development, allowing customers to hold items from multiple stores all in one place. The company has also launched a Shopify Catalog to simplify the process for apps and AI agents to search and pull product data.
Subscription revenue increased by nearly 17% to $656 million, due to higher-priced subscription plans. The Shop App's GMV skyrocketed 140%, thanks to AI enhancements.
However, the weak U.S. job market is a potential concern for investing in Shopify. The company's valuation is much higher than the 8 to 12 times multiple it has traded at in recent years. Shopify now trades at a more than 18 times forward price-to-sales (P/S) ratio based on 2025 analyst estimates and 15 times 2026 estimates.
Despite these concerns, Shopify reported strong Q2 results, with revenue growing by 31% to $2.68 billion. The company's gross merchandise volume (GMV) on its platform increased by 31% to $87.8 billion. Only 4% of Shopify's global GMV is currently shipped under the de minimis exemption by the U.S., indicating a significant volume of international trade.
In conclusion, Shopify's strategic moves and strong financial performance position it well for continued growth in the competitive e-commerce market. The company's focus on international expansion, innovative features, and robust platform are key drivers of its success.
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