Shopify (SHOP, Financial) is shaking off tariff fears as more merchants flock to its platform. After a strong 2024 marked by gains in both net income and EBITDA, Shopify is now navigating the uncertainty of the U.S. 'de minimis' policy expiration. President Harley Finkelstein is doubling down on Shopify's resilience, emphasizing that the company's AI-powered assistant, Sidekick, has doubled its monthly user base this year, pulling in more sellers and offsetting potential losses from the policy change. Notably, only 1% of Shopify's gross merchandise volume is tied to Chinese imports previously exempted from duties.
But the real story is in the numbers. Shopify managed to grow revenue consistently throughout 2024, but the lift in net income largely came from unrealized investment gains in equity holdings like Affirm, Global-E, and Klaviyo. These gains, reported across several quarters, are classified as other income rather than operational revenue, explaining why net income has been outpacing EBITDA.
Shopify forecasts second-quarter revenue growth in the mid-twenties percentage range, slightly above Wall Street's 22.4% estimate, though Oppenheimer analyst Ken Wong cautions that cost pressures could weigh on gross profit.
Still, Shopify's business model appears built for volatility. Finkelstein argues that merchants on the platform are better prepared to weather economic shifts, and with Sidekick gaining traction, Shopify is positioning itself as the go-to ecosystem for digital entrepreneurs.
