QS Research · Michael Burry's Scion Capital analyst template · 2006
SHOPIFY INC. (SHOP)
As of 2026-11-06 · 10/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -32% · downside -44% · upside +5%
The market is still paying 13.23x TTM sales, 89.4x EV/EBITDA and 90.4x P/E for a 48%-gross-margin platform whose gross-profit growth has decelerated to 28%, leaving a 1.4% FCF yield (N19, N20, N22, N23). On section 13's TTM base ($14.17B revenue, $2.10B EBITDA, $2.66B FCF), a still-premium 60x EBITDA base yields 60 x $2.10B = $126.0B EV; adding $4.73B cash gives $130.7B equity, or about $101/share on 1,290.73M shares, -32% (N8, N11, N16, N5, N1). The 7.23x peer-sales downside is 7.23 x $14.17B = $102.5B EV, +$4.73B cash = $107.2B equity, about $83/share (-44%), while 94.0x EBITDA upside is 94.0 x $2.10B = $197.4B EV, +$4.73B cash = $202.1B equity, about $157/share (+5%) (S1, N8, N11, N16, N5, N1). Base -32% and upside +5% meet the short rule; the operating business is good, but the price still embeds a multiple that current cash flow does not support.
Key numbers
- Share price: $148.91
- Market cap: $192.20B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $14.17B
- EV / EBITDA (TTM): 89.4x
- P/E (TTM): 90.4x
- Price / book: 15.08x
The 15 boxes
- ✓ 1. Long-form business notes
Shopify sells two things off one platform: a recurring subscription (platform plans, POS Pro, apps, domains, themes) and a merchant-success-based stream (Shopify Payments processing and currency conversion, lending, referrals, shipping labels, POS hardware, App Store ads, Shop Campaigns). Scale rose from $8.88B revenue in FY2024 to $11.56B in FY2025 with gross profit of $5.55B and operating income of $1.47B, funded almost entirely from operations ($2.03B operating cash flow FY2025 against $26.0M capex). Between the FY2024 and FY2025 annual reports the pitch shifted from 'simplicity and reliability' to speed, customization and AI surfaces (AI platforms as a sales channel, Agentic Storefronts, Sidekick), the app ecosystem grew from 16,000 to 21,000 apps, and headcount fell from ~8,100 to ~7,600. Watch the net income line: FY2024 net income of $2.02B sat far above operating income of $1.07B, so operating earnings, not net income, is the right read on the business.
- ✓ 2. Competitive advantage
Shopify's own filing concedes the market is "transforming, competitive and highly fragmented" with larger, better-funded rivals and with switching costs that "may not be significant for many of our merchants" — so no obvious moat of the switching-cost or licence kind is documented. What the record does show is scale and operating leverage arriving fast: operating income went from -$1.42B (FY2023) to +$1.07B (FY2024) to +$1.47B (FY2025), and operating cash flow from -$136.0M (FY2022) to $2.03B (FY2025) on capex of just $26.0M. But gross profit has not outgrown revenue across FY2022-FY2025, and the two positive net-income years outside the recent run (FY2021, FY2023) sit far above operating income, so they are not evidence of operating profitability. Verdict: an ecosystem and scale advantage, not a clearly durable one.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30, filed 2026-11-03) showed revenue of $3,742M, up 32% year over year, GMV of $119.1B, up 29%, MRR of $230M, up 19%, and Shopify Payments penetration of 68% versus 65%. Gross margin was 48% versus 49%, while income from operations was $568M versus $343M. Net income of $462M included a $(138)M net loss on equity and equity method investments and a $63M valuation-allowance tax benefit, so operating earnings should be kept separate. The risk-factor update says no material changes from the 2025 10-K.
- ○ 4. Corporate governance
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ○ 9. Insider trading interpretation
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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