Shopify Inc.'s (NASDAQ:SHOP) upcoming earnings are expected to showcase steady growth as e-commerce spending remains robust and its new OpenAI partnership unlocks additional value.
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The integration with ChatGPT gives users direct access to Shopify merchants, potentially boosting traffic and sales.
JP Morgan analyst Reginald L. Smith maintained an Overweight rating on Shopify with a price forecast of $179.
Also Read: Shopify Stock Pops On Strong Sales, Global Momentum – CFO Highlights Merchant Surge Across Regions
OpenAI Partnership
Smith listed stable e-commerce fundamentals and the OpenAI partnership as potential catalysts for Shopify's upcoming quarterly financial results.
The collaboration enables consumers to discover, shop, and checkout from Shopify merchants directly within ChatGPT, providing the company with access to over 800 million weekly active users and potentially expanding merchant reach.
Margins
The analyst expects Shopify to report healthy growth in gross merchandise volume (GMV) and gross payments volume (GPV), backed by back-to-school spending and retail activity.
However, he cautioned against the potential weakness in the October data. Street forecasts imply GMV growth of 27% and GPV growth of 33%, though Smith believes these may be conservative given recent spending resilience.
Smith expects investor curiosity regarding updates on Shopify's Agentic Commerce Protocol (ACP) and the OpenAI integration, as well as management's outlook on marketing expenses, free cash flow margins, and holiday spending trends.
The analyst also expects commentary on potential tariff impacts and progress in Shopify's move upmarket following its announcement of the Estée Lauder partnership.
His projections, namely 22% gross profit growth and 16.7% free cash flow margins, aligned with Shopify's guidance.
Smith stated that Shopify has consistently outperformed Street estimates, often beating GMV and GPV growth. He noted that low-30% GMV growth and high-30% GPV growth remain achievable.
Despite strong fundamentals, the analyst described the stock as "priced for perfection" after a 41% rally since August--significantly outpacing the S&P 500's 9% gain in that period.
While Smith expects a solid third-quarter print, he maintained a cautious tone heading into the report, given early signs of consumer selectivity and moderating discretionary spending in late September and October.
Smith projected third-quarter revenue of $2.75 billion and adjusted EPS of $0.37.
SHOP Price Action: Shopify shares were down 0.78% at $172.25 at the time of publication on Friday. The stock is approaching its 52-week high of $182.19, according to Benzinga Pro data.
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