Shopify Stock: Bull vs. Bear

Lawrence Nga, The Motley Fool

Mon, Jun 9, 2025, 1:35 AM 5 min read

• Shopify is obsessed with merchant success.

• Shopify has a sticky revenue base.

• Shopify could face multiple challenges as it tries to scale its business in the coming years.

• 10 stocks we like better than Shopify ›

Shopify (NASDAQ: SHOP) has been a massive winner over the last decade, delivering a mind-blowing 3,664% return (as of writing) since going public in 2015.

While long-term investors have benefited enormously from this rise, potential investors wonder if Shopify is a worthy stock to add to their portfolio today.

This article aims to explore the opportunities and risks associated with owning the stock over the next few years, helping investors make an informed decision.

Shopify has been an unusual company, as it competes against Amazon in the competitive e-commerce industry, yet has remained hugely successful over the last decade -- the secret lies in Shopify's unique business model.

As a start, Shopify is a software-as-a-service company focusing on enabling merchants to sell their products anywhere and everywhere. So the idea is that with the tools that Shopify offers, any seller can quickly set up an online store to sell their products globally, or employ the company's hardware-software solution (such as POS system) to sell in a brick-and-mortar store, or do both concurrently (omnichannel). In other words, Shopify aims to be the preferred partner for merchants, benefiting only when they are successful.

Shopify's fee structure further amplifies its focus on merchant success. With a monthly subscription fee of $29 for its basic plan, a new merchant can open an online store with plenty of softer tools at their disposal to make their first sale. Beyond that, Shopify takes a transaction fee ranging from 0.2% to 2% for each successful sale, aligning its interest with the seller's success.

This win-win arrangement helps explain Shopify's sustainable growth over the years. When merchants become successful using Shopify, new sellers get motivated to start their entrepreneurial journey using Shopify's platform. Besides, successful merchants contribute more revenue to Shopify and are also likely to become loyal customers.

And that brings up another key point to highlight about Shopify, namely its recurring revenue nature. For the year ending Dec. 31, 2024, the tech company had $178 million in monthly recurring revenue, or $2.1 billion annually, from its monthly subscription fees.

This revenue is extremely sticky and likely to continue growing over time. The rest of Shopify's revenue is correlated with its gross merchandise value (GMV), which is also recurring, provided that it continues to help merchants sell more products over time. For perspective, GMV grew by 26% in 2024, demonstrating the company's continued growth momentum.