Should Investors Buy Shopify Stock Before Earnings?

Core Viewpoint - Shopify is set to announce its Q3 2025 earnings on November 4, with the stock having increased nearly 575% from its 2022 lows, approaching its all-time high reached in 2021. The upcoming earnings report raises questions about whether to continue investing in Shopify or to reconsider due to high valuations [1]. Financial Performance - Consensus estimates for Shopify's upcoming earnings report suggest revenue of nearly $2.8 billion, indicating a 28% increase from the previous year [3]. - Analysts forecast a net income of $0.34 per share for Q3, representing a 26% increase year-over-year. The company has previously beaten estimates in three of the last four quarters, although it fell short in the fourth quarter of the previous year [3]. Industry Outlook - The long-term outlook for Shopify is positive, as it operates within a growing e-commerce sector projected to expand at a compound annual growth rate (CAGR) of 19% through 2030, potentially reaching over $83 trillion in size [4]. - Shopify is the leading e-commerce platform in the U.S. by the number of active websites and holds a 10% share of the global market, positioning it to capture significant growth in the industry [4]. Challenges - Despite the growth opportunities, Shopify faces challenges, including a previous stock decline of up to 87% during the 2022 bear market, which was partly due to an unsuccessful attempt to establish a capital-intensive logistics business [5][6]. - The current valuation metrics indicate potential vulnerability, with a P/E ratio of 96 and a price-to-sales (P/S) ratio of 22, suggesting that the stock price may be ahead of its fundamentals [6].