Shopify Stock Soared 30% Last Week—Here’s the Fuel Behind the Rally

Shopify just pulled off a gravity-defying act—its stock ripped higher as merchants flocked to its e-commerce platform. No magic here, just cold hard adoption.

The catalyst? BlackRock’s surprise stake disclosure lit the fuse, but the real powder keg was Shopify’s merchant growth smashing estimates. Turns out small businesses still believe in digital storefronts—even if Wall Street analysts can’t decide whether to downgrade or chase the rally.

Behind the numbers: Revenue popped 47% YoY, with subscription solutions up 53%. Gross merchandise volume? A cool $25 billion—because apparently everyone’s selling artisanal NFTs or keto granola these days.

The kicker? Shopify’s now Canada’s most valuable company. Take that, maple syrup lobby. Meanwhile, traditional retail stocks got left in the dust—another brick-and-mortar funeral courtesy of the internet.

Image source: Getty Images.

Shopify surges on strong Q2 results

In the second quarter, Shopify recorded net income of $906 million on sales of $2.68 billion. Revenue came in roughly $130 million ahead of the average Wall Street analyst estimate. Meanwhile, earnings per share of $0.35 beat the average analyst estimate by $0.06 per share, and the role that artificial intelligence (AI) played in powering sales and margin improvements also helped increase bullish sentiment surrounding the stock.

Shopify's revenue increased 30.7% year over over in the second quarter, with gross merchandise volume conducted through the company's platform rising 31% annually to hit $87.8 billion. Monthly recurring revenue rose roughly 9.5% year over year to reach $185 million, and the business posted free cash FLOW of $422 million, good for a margin of roughly 16%.

What's next for Shopify?

For the third quarter, Shopify is guiding for a mid- to high-percentage sales growth rate. Meanwhile, the business's gross profit is expected to increase a low-20s-percentage rate, and operating expenses are expected to rise to between 38% and 39% of revenue in light of increased marketing spending, employee compensation, and other factors. The company expects that its free-cash-flow margin for the period will come in at a mid- to high-teens percentage.

Shopify stock looks riskier now that recent gains have pushed its forward price-to-earnings ratio up to roughly 104, but the company has undoubtedly been serving up strong business results lately.