Shopify Cl A
Shopify Cl A
SHOP
$6.29
5.5%
4%
IBD Stock Analysis
- Stock bouncing from 21-day, extending bounce from 10-week
- SHOP working on new consolidation possibly at end of week
Industry Group Ranking
Emerging Pattern
Pullback
* Not real-time data. All data shown was captured at
10:46AM EST on
01/06/2025.
Shopify (SHOP) is the IBD Stock of the Day as the e-commerce software and services provider starts off 2025 strongly. The Canada-based company has several initiatives underway that could provide upside for Shopify stock.
On the stock market today, Shopify stock rose 4.6% to close at 114.24. Shares are up about 6% in 2025. In 2024, Shopify stock gained 36%. Shares hit a high of 120.72 on Dec. 6, then retreated a bit.
Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping.
The December quarter is usually Shopify’s best quarter annually because of the holiday shopping period.
Q4 Best Quarter Seasonally
“It’s very logical that, given our scale, you’re going to see (Q4) as most likely the strongest free cash flow margins in any given quarter,” said Shopify Chief Financial Officer Jeff Hoffmeister at a recent UBS financial conference. “We saw that last year as well in terms of how that played out.”
In December, Shopify preannounced e-commerce data following the Thanksgiving holiday.
“Shopify’s Black Friday Cyber Monday sales of $11.5 billion (up 24% year-over-year) signals that the company can achieve, and is likely to exceed consensus Q4 gross merchandise volume growth expectations of +23.5% ($92.8 billion),” said Deutsche Bank analyst Bhavin Shah in a report.
Shopify Stock: Enterprise Market
While Shopify’s roots are in catering to small- and medium-size businesses, it has expanded into the “enterprise” market targeting large companies.
In the enterprise market, competitors include Salesforce (CRM), Adobe (ADBE), and BigCommerce (BIGC).
Shopify’s e-commerce software and services were designed for companies selling products to consumers. But Shopify has expanded into business-to-business (B2B) e-commerce.
In addition, Shopify’s e-commerce business has focused on online shoppers. But the company has pushed into “point-of-sale” services in physical retail stores, especially for large merchants.
“We have a lot of excellent merchants that are working with us online that we see an opportunity to work with them offline,” Hoffmeister said. “And, of course, the natural starting point for us is the ones that have multiple locations — 10, 20, 30 locations.”
Lastly, some of Shopify’s growth is coming from expansion into Europe.
Shopify Stock: Technical Ratings
From a technical view, Shopify stock has gapped above it’s 21-day exponential moving average after earlier rebounding from its 10-week moving average. Both are bullish signals. A new entry point could be forged by the end of this week. The stock’s bounce from the 10-week line created an entry around 105.65.
Further, the e-commerce stock holds a perfect IBD Composite Rating of 99, according to IBD Stock Checkup.
IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
Meanwhile, Shopify stock has an Accumulation/Distribution Rating of B.
The rating, on an A+ to E scale, measures institutional buying and selling in a stock. A+ signifies heavy institutional buying; E means heavy selling. Think of the C grade as neutral.
Shopify Stock: Fulfillment Unit Sold
Founded in 2004, Shopify launched its initial public offering in 2015. In 2023, the company sold its delivery and logistics business to Flexport, easing investor angst over rising capital spending.
In the September quarter, Shopify earnings rose 16% to 28 cents on an adjusted basis, topping consensus estimates by a penny. Net income doubled to $344 million, topping estimates of $332 million.
Also, revenue climbed 26% to $2.16 billion, topping estimates of $2.09 billion. Also, merchant solutions revenue rose 26% to $1.55 billion, topping estimates of $1.52 billion. Shopify in April hiked prices for premium services that target bigger companies.
In the September quarter, gross merchandise volume (GMV) from merchant transactions rose 24% to $69.71 billion vs. estimates of $67.47 billion.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
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