SHOP's Merchants Drive GMV Higher: Is Growth Thesis Strengthening?

Shopify SHOP is benefiting from strong growth in its merchant base, which is driving its Gross Merchandise Volume (GMV) higher. This growth in GMV reinforces its position as a leading e-commerce platform, attracting both new merchants and deepening relationships with existing ones.

Building on this momentum in the first quarter of 2025, GMV was $74.75 billion, which increased 22.8% year over year. Same-store sales growth from existing merchants, a higher number of merchants on SHOP’s platform, and strong growth in Europe drove GMV in the reported quarter. 

Shopify’s ability to consistently deliver GMV growth of more than 20% for seven consecutive quarters underscores the strength of its platform and its ability to support merchants in scaling their businesses.

This impressive GMV growth is further supported by new merchant-friendly tools, such as Shop Pay, Shopify Pay Instalments, Sign in with Shop and the Shop App solutions, which are helping the company to win new merchants regularly. 

Shopify Payments itself is gaining traction, with GMV penetration reaching 64% in the first quarter of 2025. Shop Pay’s GMV soared 57% year over year, processing over $22 billion, while Shop App native GMV skyrocketed 94% year over year and 84% sequentially in the first quarter of 2025.

SHOP Faces Stiff Competition

SHOP faces stiff competition in the e-commerce space from companies like MercadoLibre MELI and eBay EBAY.

MercadoLibre’s rising GMV is acting as a key catalyst. In the first quarter of 2025, MercadoLibre reported GMV of $13.3 billion, which jumped 17% year over year and 40% on a FX-neutral basis. With such strong growth, MercadoLibre continues to strengthen its position in the Latin American e-commerce market.

To accelerate GMV, eBay continues to make strong efforts to deliver a better buying and selling experience to both buyers and sellers. In the first quarter of 2025, EBAY’s total GMV of $18.8 billion exhibited year-over-year growth of 1% on a reported and 2% on an FX-neutral basis.

SHOP’s Share Price Performance, Valuation and Estimates

Shopify shares have risen 9.8% year to date, outperforming the broader Zacks Computer & Technology sector’s return of 7.4%. The Zacks Internet Services industry declined 2.7% in the same time frame.

SHOP Stock Performance

SHOP stock is trading at a premium, with a forward 12-month Price/Sales of 12.66X compared with the industry’s 5.39X. SHOP has a Value Score of F.

Price/Sales (F12M)

The Zacks Consensus Estimate for second-quarter 2025 earnings is pegged at 28 cents per share, which has remained unchanged over the past 30 days. This represents a 7.69% year-over-year increase.

Shopify Inc. Price and Consensus

Shopify Inc. price-consensus-chart | Shopify Inc. Quote

The consensus mark for 2025 earnings is pegged at $1.40 per share, unchanged over the past 30 days, suggesting 7.69% year-over-year growth.

SHOP currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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