3 Reasons Why Shopify Stock Could Reach All-Time Highs Again in 2025

Shares of Canadian e-commerce company Shopify (TSX:STORE) is trading 20% ​​higher in early market trading at the time of writing, following strong third quarter (Q3) results. while TSX tech stock It’s up 50% year-to-date and is still trading 35% below all-time highs.

with one market value SHOP stock, valued at $162 billion, ranks among Canada’s largest companies. While Shopify has lagged broader markets since reaching a record high in 2021, it returned over 3,000% to shareholders after going public in 2015.

Let’s see why Shopify shares are on the rise and expect them to trade at record levels by the end of 2025.

Strong revenue growth

Despite its huge size, Shopify continues to grow at an enviable pace. Its revenue in Q3 2024 was reported at $2.16 billion, beating estimates of $2.11 billion, up 26% year-over-year. This is the sixth consecutive quarter in which Shopify has reported revenue growth of at least 25%.

The e-commerce giant reported adjusted earnings of $0.64 per share, or $364 million; which crushed estimates of $0.27 per share. Notably, its net income nearly doubled from $173 million in the previous year.

Here are a few key metrics from Shopify in Q3:

• Gross product volume increased 24% to US$69.7 billion
• Merchant solutions revenue increased 26.4% to $1.55 billion
• Gross profit rose 24.1% and margin fell to 51.7% from 52.6% last year.
• Free cash flow increased to US$421 million from US$276 million last year

Shopify continues to be the choice for merchants looking to build and grow their online presence. With revenue growth of 26% and free cash flow margins of 19%, Shopify remains a top investment option in November 2024.

Shopify stock: An expanding, addressable market

Over the years, Shopify has expanded its range of products and solutions. It has simplified the digital store operating process and offers a host of AI features to automate tasks and create brand-specific content.

The Shop app can personalize mobile shopping experiences for users, resulting in broader brand reach and strong engagement rates. Moreover, the integrated payment processing solution is supported by a powerful payment process.

Last year, Shopify estimated its total addressable market at $849 billion, giving it significant room to grow its top line given its reported sales of $7 billion in 2023.

Focus on earnings growth

In recent quarters, Shopify has focused on improving profit margins as revenue growth has slowed. The last 12 months reported free cash flow of US$1.5 billion, compared to US$905 million in 2023 and US$383 million in 2020.

Shopify is a high-flying tech stock that produces significant free cash flow, which can be used to strengthen the balance sheet and target incremental acquisitions.

Analysts who follow Shopify expect adjusted earnings to rise from $1 per share in 2024 to $1.85 per share in 2025 and reach $7.5 per share in 2028. If SHOP shares trade at 40 times forward earnings, they will trade at $300 in December 2027. It currently starts at $154.