Shopify (SHOP), a leading provider of omnichannel commerce solutions, will unveil its financial performance for the first quarter of 2025 on May 8. Over the past several quarters, Shopify's platform and services have witnessed strong demand, reflected by substantial increases in its gross merchandise volume (GMV) and revenue.

While Shopify will likely sustain its business momentum in Q1, macroeconomic headwinds and concerns around tariffs could dampen Shopify’s near-term growth outlook.

Nonetheless, Shopify stock has bounced back swiftly, rising over 23% in one month. This recovery reflects investor confidence and optimism ahead of the earnings release. The rally suggests that the market is hopeful about Shopify’s ability to navigate the current environment and continue its upward trajectory.

As Shopify’s earnings date approaches, let’s check whether Shopify stock can maintain its upward momentum.

Shopify Poised for Strong Q1 Growth

Shopify is heading into the first quarter confessional with positive momentum, building on a strong finish to 2024. While Q1 is traditionally the weakest quarter for gross merchandise volume (GMV) due to seasonal trends, the company will likely deliver solid growth, led by its focus on expanding its merchant base and increasing adoption of its commerce solutions.

Management anticipates revenue growth in the mid-20% range year-over-year for Q1, signaling confidence in Shopify’s ability to sustain its upward trajectory. Shopify’s strategic push to onboard larger, high-volume brands globally is expected to further drive growth and diversify its merchant base.

In 2024, Shopify’s B2B GMV surged by more than 140%, highlighting its increasing appeal to larger merchants. The company added new brands from a variety of industries, broadening its market reach and customer base. Although B2B still represents a relatively small portion of its total GMV, the rapid growth in this segment signals significant future opportunities and is poised to support the company’s Q1 performance.

Shopify is also strategically reinvesting in several growth areas, including its core platform, international expansion, enterprise offerings, B2B initiatives, and offline commerce. While these investments may limit near-term free cash flow margin expansion, management is confident that the company can maintain healthy profitability levels without sacrificing long-term growth potential.

Looking ahead to 2025, Shopify expects its Merchant Solutions revenue to benefit from its strong payment offering and the growing adoption of a broad range of merchant services. Meanwhile, Subscription Solutions revenue is expected to stabilize after last year’s price increases for Standard and Plus plans.

Shopify’s Q1 operating expenses are projected between 41% and 42% of revenues, reflecting a 500 to 600 basis point improvement from Q1 last year. This will cushion its bottom line. Wall Street analysts expect Shopify to report earnings of $0.17 per share in Q1, reflecting 41.7% year-over-year growth.

Will Shopify Stock Sustain the Upward Momentum?

Shopify appears well-positioned for a strong first quarter in 2025, building on its impressive momentum from the previous year. The company’s strategic focus on growing its merchant base, momentum in its B2B segment, international expansion, and product innovation will likely support its growth.

With anticipated revenue growth in the mid-20% range and a notable improvement in operating efficiency, Shopify is well-positioned to deliver solid bottom-line growth in Q1. However, macroeconomic uncertainties and tariff concerns could weigh on Shopify’s future outlook.

However, not everything is smooth sailing. Broader macroeconomic uncertainties, including tariff risks, remain potential headwinds that could affect Shopify’s outlook in the coming quarters. These concerns have made some analysts cautious ahead of the company’s Q1 earnings release.

Despite this, sentiment around Shopify stock remains largely positive. SHOP stock carries a “Moderate Buy” consensus rating from Wall Street analysts, with an average price target of $119.72, suggesting about 26% upside potential from current levels.