While the TSX Composite Index continues to climb in 2025, not all growth stocks are moving in the same direction. For example, the Canadian e-commerce giant Shopify (TSX:SHOP) is currently trading below $150 with a market cap of $192.7 billion and a 3% year-to-date decline despite solid financial growth trends.
Growth investors are understandably cautious in this environment, with macroeconomic uncertainty and shifting interest rate expectations creating a lot of noise. But sometimes, the market’s hesitation creates a window for those who are willing to take the long-term Foolish Investing approach.
In this article, I’ll talk about what Shopify is doing right, what is weighing on the stock, and whether now is the time to buy before the next upswing.
What’s driving Shopify’s stock in 2025?
Shopify’s share price may seem uncertain at the moment, but looking deeper, several interesting factors are shaping the stock’s performance lately. One of the key factors impacting Shopify’s recent stock fluctuations could be its exit from the logistics businesses. This strategic shift is likely to temporarily dampen the tech giant’s revenue growth by about 3% to 4% in the second quarter, yet boost the company’s quarterly gross margins by around 2% to 3%. Investors are still digesting this change, causing SHOP stock to swing slightly in 2025.
Also, macroeconomic pressures haven’t been very favourable for growth stocks like Shopify. The company’s recent earnings release highlighted concerns about softening economic growth in key regions, especially in the U.S. and Europe. This means consumer spending among small and medium-sized businesses could slow down slightly, keeping investors on edge.
Digging deeper into Shopify’s financial growth
However, setting aside temporary concerns, Shopify continues to showcase financial strength. SHOP stock’s latest earnings report for the first quarter of 2025 painted a clear picture of strong growth.
During the quarter, the company posted a 26.7% YoY (year-over-year) jump in its revenue to US$2.4 billion. Its adjusted quarterly EBITDA (earnings before interest, taxes, depreciation, and amortization) jumped impressively by 61.4% YoY to reach US$334 million, indicating improved efficiency and profitability.
Similarly, Shopify’s gross profit margin also climbed to 51.4% in the latest quarter, up from 47.5% a year ago. This rise mainly resulted from Shopify moving away from less profitable operations and increasing prices for subscription services. Also, the company’s free cash flow margins for the quarter doubled on a YoY basis, highlighting its improved financial health.
Is Shopify stock a buy now?
Considering these promising financial growth trends and its clear strategic moves, I find SHOP stock attractive under $150 apiece.
The company’s current focus on long-term growth and consistent profitability is continuing to boost its outlook. Moreover, it’s actively investing in advanced technologies like artificial intelligence (AI) and robust analytics, which are making its commerce platform more appealing for merchants with better tools. Given its expansive reach across 175 countries, Shopify could continue to benefit from global e-commerce growth.
Though Shopify may continue to face some near-term headwinds and macro concerns, its solid financial footing and a clear focus on long-term growth initiatives make it a great long-term buy at current levels.
