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what it is
Shopify sells software that lets merchants run online and in-person stores from one dashboard.
how it gets paid
Last year Shopify made $11.6B in revenue.
why it's growing
Revenue grew 30.1% last year. Revenue stands at $11.6B on a trailing basis.
what just happened
Shopify missed estimates on $0.48 EPS versus $0.51 expected.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
30/100 earnings predictability — expect surprises
117.0x trailing p/e — you're paying up for this one
18.5% return on capital — nothing to write home about
xvary composite: 58/100 — below average
What they do
Shopify sells software that lets merchants run online and in-person stores from one dashboard.
Shopify gives merchants one dashboard for web, mobile, social, and physical stores. That keeps your inventory, orders, and payments in one place instead of five. Tobias Lutke controls 40.03% of voting power, meaning one founder still steers the bus.
How they make money
$11.6B
annual revenue · their business grew +30.1% last year
total revenue
$11.6B
+30.1%
The products that matter
merchant commerce software
Commerce platform
$11.6B revenue
it's the entire $11.6B business and it still grew 30.1% last year. when a company this size grows that fast, the debate shifts from whether it works to how long it can keep working.
core engine
Key numbers
$11.6B
annual revenue
Revenue grew 30.1% vs. prior year. That means the machine is still printing sales, not nostalgia.
117.0x
trailing p/e
You pay 117 dollars for each dollar of trailing earnings. That leaves little room for a bad quarter.
49.0%
gross margin
Shopify keeps 49 cents of each sales dollar before overhead. That is the buffer between growth and pain.
18.5%
return on capital
Every $1 invested returned 18.5 cents in operating profit. The business earns more than it spends.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 10 / 100
- net profit margin 16.8% — keeps 17 cents of every dollar in revenue
- return on equity 19% — $0.19 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in SHOP 3 years ago → it's now worth $48,920.
The index would have given you $13,920.
source: institutional data · total return
What just happened
missed estimates
Shopify missed estimates on $0.48 EPS versus $0.51 expected.
Revenue stands at $11.6B on a trailing basis, up 30.1% vs. prior year. Gross margin held at 49.0%, so the miss was small and the growth story stayed intact.
$11.6B
trailing / FY revenue
$0.48
eps
49.0%
gross margin
the number that mattered
The $0.48 EPS print mattered most because it was 5.88% below the $0.51 estimate, even while growth stayed strong.
-
shares of shopify, inc. have been on a roll.after a sluggish start to the year, the stock gained steam towards the latter part of 2025, including reaching a new all-time-high share price in late october.
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investors remain impressed with the company's financial results and future prospects.
-
the company likely generated strong growth in 2025.
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we have raised our full-year revenue estimate by $200 million, to $11.4 billion.
-
the figure would be a 28% increase from the prior year.
source: company earnings report, 2026
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What could go wrong
the #1 risk is valuation compression in a 117.0x earnings stock.
med
valuation compression
the business can execute and the stock can still fall. a 117.0x trailing p/e leaves almost no room for an ordinary quarter, and the recent 31% monthly drop is proof that reratings here get violent.
if investors decide they only want to pay less for the same earnings, the stock can reset without the business breaking.
med
merchant spending slowdown
Shopify sits on merchant activity. if consumer demand cools or smaller merchants pull back, revenue growth does not stay at 30.1% forever.
a $221B market cap assumes premium growth. slower merchant activity would pressure that assumption directly.
med
low earnings predictability
earnings predictability is 30 / 100. in human-speak: estimates are easier to miss here than in steadier software names.
at this valuation, even a modest miss can turn into an outsized stock reaction.
med
profitability can move around
full-year net margin was 17.1%, while the latest quarterly margin shown here was 10.7%. that gap tells you the earnings profile is improving, but not in a straight line.
if margins stall while growth slows, the premium multiple loses its main defense.
these risks do not point to balance-sheet distress — the B++ grade matters there — but they do explain why price stability is just 10 / 100 and why this stock can punish even decent results.
source: institutional data · regulatory filings · risk analysis
Pay attention to
earnings
next quarterly report
the next report matters more than usual in a stock priced at 117.0x trailing earnings. one clean quarter helps. one messy one gets expensive.
metric
revenue growth on a bigger base
watch if Shopify can keep growth anywhere near 30.1% on an $11.6B revenue base. that's the number holding the valuation together.
trend
margin consistency
track whether reported profitability stays closer to the 17.1% full-year net margin profile than the 10.7% quarterly margin shown here.
risk
multiple compression
watch if the trailing p/e starts falling faster than earnings estimates improve. the business might be fine and the stock might still rerate lower.
Analyst rankings
short-term outlook
average
momentum score 3 — in human-speak, analysts see a stock acting pretty normally right now, not sending a strong directional signal.
risk profile
average
stability score 3 — middle of the pack on business risk, even if the share price feels much wilder.
chart momentum
average
technical score 3 — no standout chart signal. this is not a clean momentum story or a broken tape.
earnings predictability
30 / 100
earnings are harder to model here than in steadier large-cap software names. expect surprises, both good and bad.
source: institutional data
Institutional activity
institutions have been net buying for 3 consecutive quarters — 809 buyers vs. 688 sellers in 3q2025. total institutional holdings: 0.8B shares. net buying for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$103
$284
$170
current price
$194
target midpoint · +14% from current · 3-5yr high: $284
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