Shopify (SHOP) stock is falling Tuesday despite the e-commerce company beating estimates in Q4 2024. The company’s holiday quarter included strong revenue of $2.81 billion, easily surpassing Wall Street’s estimate of $2.71 billion. This represents a 31.3% increase year-over-year from revenue of $2.14 billion.
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Shopify’s revenue increase was powered by strong performance throughout 2024, including a 33% increase in international and offline revenue. The company also reported B2B GMV growth of less than 140%, Shop Pay GMV growth of over 50%, and Gross Payments Volume growth of more than 32% during the year.
Even with Shopify beating revenue estimates in Q4, investors aren’t happy with the company. This has SHOP stock down 3.52% during pre-market trading today. That’s a switch from its year-to-date growth of 12.76% and 52-week increase of 34.54%.
SHOP Stock Drags on Guidance Update
The bad news for Shopify stock comes from its Q1 2025 guidance of gross profit growth percentage in the low twenties. That’s likely to miss analysts’ estimate of 24.2% gross profit growth. Operating expense as a percentage of revenue is set to be 41% to 42% during the quarter, compared to 31.5% in Q4. Weighing on Shopify’s Q1 outlook is its continued investment in Shopify Magic, a collection of AI tools.
Shopify expects revenue growth percentage for Q1 2025 to increase in the mid-twenties compared to Q1 2024. This mostly lines up with Wall Street’s guidance for the quarter, leaving investors somewhat unimpressed after its stellar Q4 revenue.
Is SHOP Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Shopify is Moderate Buy based on 21 Buy, 12 Hold, and two Sell ratings over the past three months. With that comes an average price target of $122.87, a high of $175, and a low of $84. This represents a potential 2.48% upside for SHOP stock. These ratings and price targets will likely change as analysts update their coverage after today’s earnings report.
