One-glance verdict
Overvalued
$50.28 our estimate vs market $145.09
Wall Street consensus: $171.15 (240.4% higher than our fair-value estimate)
189% above our estimate, beyond the bull case
Fundamentals snapshot
Shopify Inc.
SHOP · NMS · Technology · Software - Application
Current price
$145.09
52-week range
$94.00 - $182.19
Market cap
$188.28B
Balance sheet
Healthy
1,639.13x Strong cushion
Net cash $4.77B. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
1 Risk
2 rewards · 1 risks
- Reward Revenue grew 14.8% last year.
- Reward Free cash flow was positive in 6/10 years.
- Risk Insider ownership is only 0.2% (peer median: 3.0%).
What this company does
Shopify Inc.
Shopify provides an all-in-one toolkit for anyone who wants to create and manage their own online or physical stores. The company makes money mainly from the monthly subscription fees businesses pay to use its platform, which creates predictable recurring revenue (income that comes in regularly, like a subscription), and by taking a small cut of every sale a store makes. This matters because Shopify's success is directly tied to the success of the thousands of independent businesses using its tools, so it grows as they sell more products.
How the company got here
Shopify started in 2004 because its founders wanted to sell snowboarding equipment online but were frustrated with the existing e-commerce tools. They decided to build their own platform, which they initially used for their store, called Snowdevil. Realizing that other merchants needed a better way to sell online, they launched their software as Shopify in 2006. Key turning points included launching an App Store in 2009, which allowed other developers to add features, and introducing Shopify Payments in 2013, which made it easier for businesses to accept credit cards. The company grew rapidly, especially during the COVID-19 pandemic when many businesses moved online.
What it actually does
Shopify provides the tools for anyone to create their own online store and sell products directly to customers. Think of it as a one-stop shop for a business that wants to sell things online, providing everything from the website design to payment processing and inventory management (keeping track of what you have in stock). It's designed to be user-friendly, so someone with no technical skills can set up a professional-looking online shop. The platform is used by a huge range of businesses, from individual entrepreneurs to large, well-known brands.
Subscription Solutions
This is one of the two main ways Shopify makes money and involves charging merchants a recurring monthly or annual fee to use its platform. These plans come in different tiers, from a basic plan for new businesses to a more advanced and expensive plan called Shopify Plus for large-scale enterprises. This part of the business provides a steady and predictable stream of revenue (money the company earns). This segment accounts for a smaller portion of Shopify's total revenue compared to its other main business line.
Merchant Solutions
This is Shopify's largest and fastest-growing source of revenue, making up the majority of its income. Instead of a flat fee, this segment makes money by taking a small percentage of the sales that businesses make through their Shopify stores. This includes fees for using Shopify Payments, its own payment processor, as well as revenue from services like shipping labels, small business loans (Shopify Capital), and point-of-sale hardware for in-person stores. Essentially, as the businesses using Shopify sell more, Shopify makes more money, aligning its success with the success of its merchants.
What management is betting on now
Shopify is focused on being the main platform for businesses that want to sell everywhere, both online and in physical stores, an approach often called "unified commerce". They are continuing to expand internationally, helping businesses in different countries sell to a global audience. The company is also investing in its fulfillment network, which helps merchants store and ship their products, directly competing with services like Amazon's. Another key priority is expanding its ecosystem of apps and services, which makes the platform more valuable and harder for merchants to leave.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$421.00M
FY2024 Q4
$611.00M
FY2025 Q1
$363.00M
FY2025 Q2
$422.00M
FY2025 Q3
$507.00M
FY2025 Q4
$715.00M
FY2026 Q1
$476.00M
FY2026 Q2
$654.00M
Revenue
$3.58B
Net income
$1.50B
Diluted EPS
1.16
Operating cash flow
$658.00M
Free cash flow
$654.00M
Fetching…
Sources
Revenue
$3.17B
Net income
$-581.00M
Diluted EPS
-0.45
Operating cash flow
$481.00M
Free cash flow
$476.00M
Fetching…
Sources
Revenue
$3.67B
Net income
$743.00M
Diluted EPS
0.58
Operating cash flow
$725.00M
Free cash flow
$715.00M
Fetching…
Sources
Revenue
$2.84B
Net income
$264.00M
Diluted EPS
0.20
Operating cash flow
$513.00M
Free cash flow
$507.00M
Fetching…
Sources
Revenue
$2.68B
Net income
$906.00M
Diluted EPS
0.69
Operating cash flow
$428.00M
Free cash flow
$422.00M
Fetching…
Sources
Revenue
$2.36B
Net income
$-682.00M
Diluted EPS
-0.53
Operating cash flow
$367.00M
Free cash flow
$363.00M
Fetching…
Sources
Revenue
$2.81B
Net income
$1.29B
Diluted EPS
0.99
Operating cash flow
$615.00M
Free cash flow
$611.00M
Fetching…
Sources
Revenue
$2.16B
Net income
$828.00M
Diluted EPS
0.64
Operating cash flow
$423.00M
Free cash flow
$421.00M
Fetching…
Sources
Is it cheap or expensive?
Fair value $50.28 vs current price $145.09
Wall Street consensus is the average analyst price target: $171.15 (240.4% higher than our fair-value estimate).
Our most-likely fair value is $50.28 a share — about 65.3% below today's price of $145.09, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $4.8B - more cash than debt. Interest coverage 1639.1x.
Net debt
$-4.77B
Interest coverage
1,639.13x
Shopify Inc.'s profit covers its interest bill about 1639.1 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
SHOP
BASELINE
Shopify Inc.
Total debt $178.00M Interest coverage 1,639.13x This is the baseline the peer rows are being compared against.
Total debt $7.08B Interest coverage 33.10x -98% vs SHOP Carries about 49.5x less debt cushion than SHOP.
Total debt $2.04B Interest coverage 0.46x -100% vs SHOP Carries about 3584.2x less debt cushion than SHOP.
What you should know
The case for and against SHOP
2 Rewards
1 Risk
Rewards
-
Revenue grew 14.8% last year.
-
Free cash flow was positive in 6/10 years.
Risks
-
Insider ownership is only 0.2% (peer median: 3.0%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
98.03x
Forward P/E
59.15x
P/B
14.75x
P/S
14.19x
EV/EBITDA
75.95x
PEG ratio
2.61x
Profitability
How much profit each dollar creates
Gross margin
47.8%
Operating margin
17.6%
Net margin
14.5%
ROE
15.5%
ROA
10.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.01x
Current ratio
5.35x
Quick ratio
3.72x
Total debt
$178.00M
Total cash
$4.95B
Growth
How the business has been compounding
Revenue TTM
$13.27B
Revenue 5Y CAGR
25.8%
EPS TTM
1.48
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$2.38B
Free CF TTM
$2.01B
FCF margin
15.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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