Shopify Inc. (SHOP): A Bull Case Theory

We came across a bullish thesis on Shopify Inc. on Compounding Your Wealth’s Substack by Sergey. In this article, we will summarize the bulls’ thesis on SHOP. Shopify Inc.'s share was trading at $151.30 as of October 2nd. SHOP’s trailing and forward P/E were 84.06 and 82.64 respectively according to Yahoo Finance.

Shopify (SHOP) continues to assert its leadership in e-commerce by leveraging a wide economic moat, robust R&D, and a scalable platform that serves over 4.6 million merchants globally. The company’s core strengths—switching costs, brand, and economies of scale—anchor long-term durability, while network effects and intellectual property further reinforce its competitive positioning. Revenue growth remains strong, with Q2 2025 posting +31.1% YoY, and guidance suggests potential acceleration to +34.2% in the next quarter.

Merchant Solutions, driving 75.5% of revenue, expanded through higher GMV and deeper payment penetration, while Subscription Solutions grew more modestly at +16.5% YoY but maintained high gross margins of 81.6%. Shopify’s strategic focus on higher-value Plus plans, AI-powered tools like Sidekick, the AI Store Builder, and the redesigned POS app are enabling faster time-to-market, smoother operations, and higher enterprise adoption, including major wins from Starbucks, Canada Goose, Burton, and Michael Kors.

International expansion continues, with payments and financing services now in 16 new countries, driving 49% GMV growth in Europe. Key performance indicators highlight resilient growth: GMV and GPV accelerating, MRR growth moderating at +9% YoY, and attach rates rising to 3.10%, underscoring platform stickiness. Free cash flow remains robust, with a healthy balance sheet of $5.8 billion in cash against $1.1 billion in debt, supporting operational flexibility.

While Shopify trades at premium multiples—EV/S 15.16, P/E 95.7, PEG 3.8—its wide moat, accelerating enterprise traction, and exposure to a $849 billion TAM with only 2% penetration justify a premium. The company’s disciplined focus on high-margin subscription solutions, strong execution, and ongoing innovation create a compelling long-term growth opportunity.

Previously we covered a bullish thesis on Shopify Inc. (SHOP) by Compounding Your Wealth in May 2025, which highlighted the company’s strong e-commerce position, U.S. market share, high-margin revenue streams, and disciplined balance sheet. The stock has appreciated approximately 49% since our coverage. The thesis still stands as Shopify scales globally. Investing Intel shares a similar perspective but emphasizes the wide moat, R&D, and AI tools driving enterprise adoption.

Shopify Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 69 hedge fund portfolios held SHOP at the end of the second quarter which was 77 in the previous quarter. While we acknowledge the potential of SHOP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.