Shopify Stock Falls as Q2 Profit Forecast Dims Amid Tariff Concerns
Shopify stock drops after Q1 2025 earnings beat expectations but Q2 profit outlook disappoints due to tariff impacts on e-commerce. Revenue and GMV rise.
Shopify Inc. (SHOP) reported its Q1 2025 earnings on May 8, 2025, revealing strong revenue and gross merchandise volume (GMV) growth but a cautious Q2 profit outlook.
The Canadian e-commerce giant posted revenue of $2.36 billion, up 27% year-over-year, surpassing Wall Street estimates of $2.33 billion. GMV reached $74.75 billion, a 23% increase, slightly above expectations of $74.66 billion. Operating income rose to $203 million from $86 million a year ago, reflecting improved efficiency.
Despite these gains, Shopify stock fell 7.9% in trading, closing at $88.281, down from a previous close of $94.50. The decline was driven by a net loss of $682 million, primarily due to non-cash charges, and a weaker-than-expected Q2 profit forecast.
Shopify guided Q2 revenue growth in the mid-20% range, aligning with estimates, but highlighted potential margin pressure. Tariffs, particularly those imposed under President Trump’s policies, are raising costs for merchants, especially those reliant on cross-border trade.
Analysts note that tariffs could increase product costs by 10% to 145%, depending on the source country, forcing merchants to raise prices or absorb losses. This threatens Shopify GMV, as small and medium-sized businesses, its core clientele, face reduced sales volumes.
Shopify focus on AI tools, like Shopify Magic, and enterprise expansion continues to drive growth. The company reported a 24% rise in monthly recurring revenue to $178 million, though it missed estimates slightly.
Wall Street remains cautiously optimistic. BMO Capital issued an Outperform rating with a $120 price target, while Benchmark cut its target to $125 but maintained a Buy rating, citing long-term potential despite near-term tariff challenges.
The e-commerce landscape is under strain. Posts on X reflect mixed sentiment, with some highlighting Shopify strong fundamentals and others pointing to tariff-related risks. The stock year-to-date performance shows volatility, with a high of $99.8174 and a low of $84.772.
Investors are focused on Q2 guidance and how Shopify navigates tariff disruptions. While revenue growth and AI investments signal resilience, profitability concerns and trade barriers cloud the outlook.
