Analyst on Wall Street believes Shopify's value could reach $150. Is it worth investing in?
Shopify's reign in the e-commerce software sector continues unabated, showing no signs of weakening even after years of impressive growth. In the last quarter, Shopify's gross merchandise value (GMV) surged 26% to an impressive $94.5 billion, while revenue bucked up 31% to $2.81 billion, surpassing estimates by a cent. The company's earnings per share also saw a substantial rise, going from $0.34 to $0.44, outdoing estimations by a penny.
Shopify's ability to excel across its business is notable. Having moved past the setback of the Deliverr acquisition, the company is now thriving in its core e-commerce arena, constantly innovating, expanding into new markets, and attracting clients of all sizes. The growth of its payments revenue stream is another attractive aspect. These developments have not gone unnoticed by Wall Street analysts. Several have upgraded their price targets on Shopify's stock, and one upped the ante ahead of its earnings report.
Shopify Rated a Buy by Benchmark
Just before its latest earnings release, Benchmark upgraded Shopify's rating from a hold to a buy. Analyst Mark Zgutowicz hailed Shopify Audiences for its contribution to the company's success. This marketing tool, available exclusively to Plus merchants in North America using Shopify Payments, helps merchants locate new customers and boost their advertisement performance. The new rating came with a $150 price target, indicating a 25% potential increase over the stock's price at the time of the upgrade.
Should You Buy Shopify Stock?
Shopify's revenues have maintained a growth rate of 25% or higher for seven consecutive quarters, excluding its logistics venture. Its guidance points towards another promising year, anticipating revenue growth within the mid-20% range for 2025.
While Shopify stock may seem expensive, the company's dominance in the vast e-commerce market and its untapped potential to increase GMV and payments volume, as well as generate revenue from new services and features, make it an attractive investment prospect. The company continues to be the leader in its sector and has plenty of room for growth.
Enrichment Insights
Recent analyst predictions and reasons for considering Shopify (SHOP) a buy include:
- Stock Price Forecast:
- $175 by 2025: One analyst predicts Shopify stock could reach $175 by the end of 2025, reflecting a potential upside of 38% from its closing price on February 14, 2025[1][3].
- $124.23 to $196.58 in 2025: Another forecast estimates Shopify's stock to reach $124.23 in 2025 with a growth rate of 69.16%, and potentially $196.58 by December 2025[4].
- Growth Metrics:
- Strong Revenue Growth: Shopify has delivered consistent financial metrics, including seven consecutive quarters of pro forma revenue growth exceeding 25%, sustained GMV growth rates above 20% for six consecutive quarters, and maintained positive free cash flow for nine straight quarters[1][3].
- International Expansion: The company has seen significant growth in international markets, with GMV outside North America climbing 33% in the fourth quarter of 2024[1][3].
- Operational Efficiency and Customer Experience:
- Unified Commerce Solution: Shopify provides a unified commerce solution that seamlessly connects online and in-store operations, improving operational efficiency and customer experience[2].
- Customer Data Utilization: The platform allows for the collection and utilization of customer data, enhancing personalization and leading to a 20% increase in order value for brands using unified customer profiles[2].
- Strategic Initiatives:
- Enterprise and Offline Retail Expansion: Shopify is aggressively pushing into high-growth segments like enterprise, offline retail, and international markets, driving significant top-line growth[3].
- Artificial Intelligence and Payment Solutions: The company is investing in AI and payment solutions to enhance its ecosystem and competitive edge[3].
- Investment Opportunity:
- Moderate Buy Consensus: Despite concerns about valuation, the consensus rating on Shopify stock remains “Moderate Buy,” reflecting optimism about its long-term potential and strategic initiatives[3].
These factors collectively suggest that Shopify stock is an attractive investment opportunity, driven by its strong growth trajectory, operational efficiency, and strategic initiatives. However, investors should remain cautious about valuation concerns and market volatility.
- Shopify's financial performance in the last quarter was impressive, with GMV increasing 26% to $94.5 billion, driven partly by its success in attracting clients of all sizes and expanding into new markets.
- Analysts are excited about Shopify's potential for faster growth, with one prediction suggesting that the stock could reach $175 by 2025, reflecting a potential upside of 38%.
- To boost advertisement performance, Shopify's marketing tool, Shopify Audiences, located new customers for merchants using Shopify Payments, contributing to the company's success.
- Investors might consider Shopify as an attractive investment prospect due to its dominance in the e-commerce market and untapped potential to increase GMV and payments volume, as well as generate revenue from new services and features.
