Shopify Rises 35% Year to Date: Buy, Sell or Hold the SHOP Stock?

Shopify SHOP shares have appreciated 34.9% in the year-to-date period compared with the broader Zacks Computer & Technology sector’s return of 16% and the Zacks Internet - Services industry’s gain of 23.6%. New merchant-friendly tools, such as Shop Minis, Shop Cash, and Sign in with Shop, as well as Shop Pay solutions, are helping SHOP win merchants regularly. 

Merchant solutions revenues in the second quarter of 2025 were $2.02 billion, up 36.6% on a year-over-year basis, driven by strong Gross Merchandise Volume (GMV) and increased penetration of Shopify payments. GMV in the second quarter of 2025 was $87.84 billion, which increased 30.6% year over year, with offline GMV up 29% year over year, and B2B GMV jumped 101%. Its merchant-friendly tool Shop Pay stands out as a key driver. The app processed $27 billion in GMV, up 65% year over year. The expansion of payment products into more countries, 16 launched till the end of the second quarter, drove GMV.

Shopify’s growing international footprint is a key catalyst. International GMV grew 42% year over year in the second quarter of 2025, with Europe leading the charge. Shopify Capital is now available in Germany and the Netherlands, providing more merchants with access to growth funding. The company also launched Shop Pay Installments in Canada.

SHOP Stock's Performance

However, does an expanding clientele and rich partner base improve SHOP’s appeal for investors? Let’s analyze.

SHOP Benefits From a Strong Clientele, Rich Partner Base

Shopify’s growing popularity is driving clientele that includes Starbucks, Canada Goose, Burton Snowboards, Michael Kors, Miele, Beachbody, and Signet Jewelers. The Shop App saw 140% year-over-year growth in native GMV, driven by Shop Week, where sales more than doubled compared to last year’s event. Sign-ins through Shop increased by 46% due to improved availability and a much smoother user experience.

Shopify is leveraging AI to transform how consumers discover and shop for products. The company’s investment in AI-driven tools, such as AI store builder, Catalog, Universal Cart, and Sidekick, is helping merchants improve customer engagement and streamline operations. Infusion of AI into Shop search and the home feed is helping buyers see the right products at the right time, driving higher engagement and conversion.

Shopify’s rich partner ecosystem has been a major growth driver. An expanding partner base, which includes Microsoft MSFT, TikTok, Roblox RBLX, PayPal, Snap, Pinterest, Criteo, IBM, Cognizant, Google Cloud and Adayen, has further expanded its merchant base.

Shopify’s partnership with Microsoft has been noteworthy. The partnership with Microsoft involves the integration of Shopify’s Checkout Kit into Microsoft’s Copilot, a major player in the AI space. This integration allows merchants to embed their checkout process directly within Microsoft’s AI-driven platform, enabling seamless shopping experiences for users. 

In its commerce integration partnership with Roblox, Shopify has opened new avenues for merchants to reach a younger and more engaged audience. This collaboration with Roblox allows Shopify to strengthen its position in the digital commerce space.

SHOP Suffers From Stiff Competition

Despite SHOP’s strong growth in its merchant base and expanding footprint, it is facing stiff competition in the e-commerce marketplace against the likes of Amazon AMZN and Alibaba.

Amazon is expanding its footprint in the e-commerce space by continuously expanding its product offerings. In the second quarter of 2025, Amazon launched Generative AI tools to enhance the shopping experience, including “Hear the highlights” for audio summaries of reviews and “Enhance My Listing” to keep product listings current and compelling.

SHOP’s 2025 Earnings Estimates Revisions Are Steady

The Zacks Consensus Estimate for SHOP’s 2025 earnings is currently pegged at $1.44 per share, unchanged over the past 30 days and indicates year-over-year growth of 10.77%.
 

Shopify Inc. Price and Consensus

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

The consensus mark for SHOP’s 2025 revenues is currently pegged at $11.21 billion, indicating year-over-year growth of 26.24%.

SHOP Stock Overvalued

SHOP stock is currently overvalued, as suggested by the Value Score of F. 

The stock is trading at a premium, with a forward 12-month price/sales of 14.53X compared with the sector’s 6.74X.

SHOP Stock's Valuation

Here is Why Shopify is a Hold Now

Shopify is benefiting from strong growth in its merchant base and an expanding international footprint. Hence, investors who already own the stock may expect the company’s growth prospects to be rewarding over the long term. 

However, intensifying competition, challenging macroeconomic uncertainties, and cautious consumer spending are headwinds. Gross margin is expected to remain under pressure due to higher hosting costs, the return to three-month paid trials, and the expanded PayPal partnership, which carries lower margins. Stretched valuation also remains a concern.

Shopify currently has a Zacks Rank #3 (Hold), which implies that investors should wait for a more favorable time to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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