Shopify's BFCM Sales Hit $14.6B, Supporting Growth Guidance but Not Addressing Core Risks

What happened

Shopify announced a record $14.6 billion in merchant sales over the Black Friday-Cyber Monday weekend, marking a 27% year-over-year increase. This performance aligns with management's Q4 2025 guidance for mid-to-high-20s revenue growth, as highlighted in the DeepValue master report. However, merchant sales growth does not directly equate to proportional revenue or profit increases, given Shopify's revenue mix between lower-margin merchant solutions and subscription services. The report underscores significant risks, including rising transaction losses, a demanding valuation with a P/E of 106, and regulatory exposures like the EU DSA. While this news bolsters near-term growth expectations, it fails to resolve the fundamental concerns around profitability and valuation that underpin the current HOLD recommendation.

Implication

The 27% growth in merchant sales indicates Shopify is likely on track to meet its Q4 revenue guidance, which could provide short-term support for the stock. However, investors must critically assess how this sales volume translates into actual revenue and gross profit, especially with increasing transaction losses from merchant solutions scaling. The DeepValue report warns of a high P/E ratio of 106 and an external DCF anchor well below the current price, suggesting limited margin of safety despite growth. Regulatory challenges, such as potential fines under the EU Digital Services Act, add to operational uncertainties that could compress margins. Consequently, while the news is encouraging, it does not justify a shift from the HOLD thesis without clearer evidence of sustainable profitability and risk mitigation.

Thesis delta

The record BFCM sales growth of 27% reinforces Shopify's ability to meet its near-term growth guidance, aligning with the bullish aspects of the current thesis. However, it does not address the critical downsides: the stock's high valuation, rising transaction losses, and regulatory risks that keep the risk/reward skewed. Thus, no material shift in the investment thesis occurs, maintaining the HOLD stance pending further execution on profitability and cost controls.