This week, a picture of the Shopify sign in Ottawa partially covered in snow appeared in the Financial Post. For some reason, this picture better conveys the sentiment surrounding the stock than any chart. The business is doing well. It’s a good product. By all standards, the cash flow is more than satisfactory. Despite this, shares ended Friday at $127.67, still down about 30% from their October high of $182.19, as traders prepared for the first-quarter earnings that are expected to be released before the market opens on Tuesday.
A 5.4% increase on Friday is the type of pre-earnings rally that indicates someone has once again chosen to believe the numbers. The conversation on social media has become more optimistic. The majority of large firms’ analysts have buy ratings, with price targets centered between $145 and $160. According to early data through April, GMV held up despite the tariff noise, and investors appear to think Shopify will deliver another quarter of strong gross merchandise volume. It remains to be seen if that will be sufficient to break the spell of the stock.
The discrepancy between the operating story and the share price is what currently makes Shopify intriguing. Revenue for the entire year 2025 increased by 30% to $11.6 billion. The company made more money in Q4 alone ($3.67 billion) than it did in 2020. Ten quarters in a row have seen double-digit free cash flow margins. Shopify has a $2 billion buyback, 48% gross margins, and $6.6 billion in net cash. This is an uncommon animal by software standards. The multiple has been reduced by about half by 2021 standards.
The bear case has a face and a name. In August, when shares were trading at about 95 times forward earnings, Liam Gallagher of Veritas Investment Research downgraded SHOP to sell back. As the stock surged above $180 in October, the call initially appeared premature and almost embarrassing. Then the softer outlook for November collapsed, the selloff started in earnest, and the new year brought more widespread concerns about AI upending software platforms. Gallagher hasn’t changed. His goal is $163.51, and he believes that since the math was never the issue, even a fantastic quarter won’t alter the results. That was the cost.
It’s difficult to ignore how Shopify has turned into a mirror for whatever worries investors that month. Since cross-border merchants account for a sizable portion of the market, tariffs and the dissolution of de minimis exemptions have raised serious concerns. Expanded managed-markets tools, duty-inclusive checkout pricing, and a tariff guidance product that helps small sellers understand what happened to their margins are just a few of the shipping fixes that management has been working on. Lütke’s team seems to work with a sense of urgency that is uncommon in businesses this size. On the weekends, they write code. They quarrel in public. On X, they occasionally overshare. One of the more intriguing questions in technology today is whether that culture will endure the next ten years of scale.
A conflicting picture is presented by the institutional flows. In the fourth quarter of 2025, 816 funds increased their holdings while 860 reduced them. Capital Research sold nearly 80% of its holdings, while Rockefeller Capital increased by 477%. Guardian Capital’s Sam Baldwin talked about starting a new position following the pullback, describing the combination of improved valuation and unaltered business quality as a more alluring entry. Even though the short term seems uncertain, there is faith in the long arc.
There will be a lot of noise on Tuesday morning. Analysts predict revenue growth of between 27% and 31% and an EPS of about $0.33. Somewhere in Ottawa, the snow will most likely still be on that sign when the numbers land and the headlines follow. The part that no one can quite predict yet is what happens after the print. For twenty years, Shopify has been undervalued, overvalued, forgotten, and then rediscovered. The next phase is still unknown.
