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On Wednesday, Cantor Fitzgerald analyst Deepak Mathivanan adjusted the price target for Shopify (NASDAQ: NASDAQ:SHOP) shares, reducing it to $80 from the previous $120, while maintaining a Neutral rating on the stock. According to InvestingPro data, the company maintains strong financial health with a current ratio of 3.71 and more cash than debt on its balance sheet. The revision comes with insights into Shopify’s expected performance, including first-quarter gross merchandise volume (GMV) growth anticipated to be in the mid-20s percentage year-over-year and revenues projected to reach the high-end of prior guidance, building on the company’s impressive 25.78% revenue growth over the last twelve months.
Mathivanan provided further projections for the second quarter of 2025, noting a likely deceleration in GMV growth to 19% year-over-year, a drop of approximately 5 percentage points. This slowdown is attributed in part to a pull-in effect that may have caused a spike in strength during April. However, the analyst suggests that GMV could increase in the second half of the year as sellers adjust prices to account for higher costs from tariffs and as inventory cycles progress.
For the second quarter of 2025, Cantor Fitzgerald has modeled revenues and earnings before interest and taxes (EBIT) to be at $2.5 billion and $292 million, respectively. Yet, they anticipate revenue growth to decelerate to mid-teen percentages year-over-year in the latter half of the year. Additionally, slower net subscriber additions for both Shopify’s small and medium-sized business (SMB) segment and Shopify Plus are forecasted over the coming quarters.
Despite Shopify’s shares underperforming in the last 30 days, with a notable 8.19% decline just last week, they continue to trade at premium valuations across multiple metrics. The stock currently trades at 53.5 times earnings, significantly above industry averages. Mathivanan believes that further downward revisions to estimates could exert additional pressure on the stock’s multiples, a concern supported by InvestingPro data showing 18 analysts have recently revised their earnings estimates downward. The reaffirmed Neutral rating and the newly adjusted price target of $80 reflect the analyst’s perspective on the potential challenges Shopify may face. For deeper insights into Shopify’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, covering over 1,400 top US stocks.
In other recent news, Shopify has been the focus of several analyst assessments and internal strategic shifts. Loop Capital reduced its price target for Shopify to $120 from $150 while maintaining a Buy rating, citing a decline in merchant satisfaction and potential revenue growth slowdown. Despite these concerns, the firm remains optimistic about Shopify’s financial health, particularly due to its strategic implementation of artificial intelligence (AI). Meanwhile, JMP Securities maintained a Market Outperform rating with a price target of $135, highlighting Shopify’s focus on AI as a significant factor in enhancing product development and maintaining a competitive edge.
Baird also adjusted its price target for Shopify to $110 from $135, keeping an Outperform rating. The adjustment was influenced by revised revenue estimates and the current market environment, with concerns about consumer spending in discretionary sectors. Wolfe Research further lowered its price target to $90 from $140, maintaining an Outperform rating but expressing caution due to Shopify’s high valuation multiple and exposure to discretionary spending.
Shopify’s CEO, Tobi Lutke, has emphasized the importance of AI in the company’s operations, encouraging staff to adopt AI tools to enhance productivity. Lutke has made it clear that AI usage is now a baseline expectation at Shopify, aiming to drive efficiency and innovation. These developments reflect Shopify’s strategic focus on leveraging AI to navigate the challenging economic landscape and support its long-term growth.
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