Shopify (TSX:SHOP) stock has been on quite the comeback journey. After a brutal 73% plunge in 2022, SHOP stock has roared back with a stunning 225% gain over the last two years. But so far in 2025, things are off to a slower start, with the stock up just 1% as of January 27. With this, the Ottawa-based e-commerce platform giant currently trades at $154.47 per share with a market cap of $199.5 billion. Tech investors are understandably cautious right now as they wait for interest rate decisions from the Federal Reserve and the Bank of Canada as well as insights from the upcoming corporate earnings season.
So, what’s next for Shopify? In this article, I’ll break down the key fundamental factors that could shape Shopify stock’s performance in 2025. But first, let’s take a closer look at the reasons for its strong performance over the last two years.
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What drove Shopify stock higher in 2024?
The recent remarkable rebound of Shopify’s stock over the past two years could be attributed to a mix of several factors, including its strategic initiatives, robust financial growth trends, and the company’s ability to thrive even amid slowing global economic growth.
In the last couple of years, Shopify has tried to benefit from global trends like the continued shift toward online shopping and the integration of advanced technologies like artificial intelligence (AI) into its platform. This adaptability has not only strengthened its market position but also helped Shopify regain investor confidence.
Strong financial momentum
Shopify’s financial growth trends in recent quarters remained strong. In the third quarter of 2024, the company posted a 26.1% YoY (year-over-year) increase in revenue to US$2.16 billion. To add optimism, its gross merchandise volume (GMV) surged 24% from a year ago to US$69.7 billion, which reflected the strength of its merchant network. Also, SHOP’s free cash flow hit US$421 million last quarter with its continued focus on growing operational efficiency and reducing costs.
Interestingly, Shopify’s adjusted sales growth (excluding its logistics business) has remained above 25% for six straight quarters.
Another important factor that could have contributed to Shopify stock’s impressive performance of late is its expanding profit margins. In the September 2024 quarter, the company’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) jumped 33% YoY to US$406 million. More importantly, its adjusted EBITDA margin expanded to 18.8% from 16.3% a year earlier. These profitability gains clearly show Shopify’s disciplined approach to balancing growth investments with operational leverage.
Consistent focus on long-term growth initiatives
While Shopify has seen solid financial growth in the post-pandemic era, it is continuing to focus on long-term growth initiatives. These initiatives include the company’s efforts to make its platform more attractive and easier to use for merchants while expanding its global presence. SHOP’s focus on AI could also help it achieve these goals. For example, its recently launched tools like Shopify Magic help merchants optimize operations, simplify marketing efforts, and deliver personalized customer experiences.
In 2025, Shopify could benefit from its push into offline retail and international markets. Moreover, its robust subscription solutions and merchant services could continue to drive recurring revenue and help it maintain a strong cash flow. Given these positive factors, Shopify stock continues to be one of the most attractive tech stocks on the Toronto Stock Exchange, with the potential to continue driving in 2025 and beyond.
