Shopify Inc. headquarters in Ottawa in May, 2023.Sean Kilpatrick/The Canadian Press
Shopify Inc. is facing growth headwinds owing to U.S. tariffs, global trade tensions and concerns about falling consumer demand, say analysts who have sharply reduced their targets for the e-commerce platform’s stock.
Since U.S. President Donald Trump announced global tariffs on April 2, at least a dozen equity analysts have downgraded their price targets, citing the risk of slowing volumes of shipments by Shopify merchants.
One major concern relates to the coming elimination of the de minimis exemption of U.S. duties payable on shipments of goods from China valued at under US$800, analysts noted.
Shopify’s share price has fallen about 14 per cent since April 2. Since that day the trade war has escalated, with the U.S. now charging 145-per-cent tariffs on items imported from China.
RBC Capital Markets analyst Paul Treiber late Wednesday reduced his target for the company, to US$125 from US$145. The company’s stock closed at US$83.65 on the Nasdaq Stock Market on Thursday.
Shopify provides e-commerce services for small businesses and retailers, charging subscription and transaction fees. Those businesses could be hit both by the added duties and by any slowdown in spending, should costs for American consumers increase.
“We believe Shopify is likely to face growth headwinds over the next several quarters, as a result of the inflationary impact of tariffs and the removal of the de minimis exemption. Shares are likely to remain volatile and valuation may be pressured in the near-term,” Mr. Treiber said in a note to investors.
Mr. Treiber estimated that up to about one-10t of the company’s total gross merchandise value – the value of the products sold over its platforms – comes from U.S. dropshipping accounts, which resell cheap imported products, and that this volume could now drop by half. He estimated that products sourced from China represented between 25 per cent and 30 per cent of imports in Shopify’s core categories.
Despite the pressures, he maintained his “outperform” rating for the company, saying that Shopify remained “one of the most compelling long-term organic growth stories” in the bank’s coverage.
In the longer term, Shopify may see more uptake of several of its add-on services, including tariff calculation, cash-advance and supplier-sourcing tools, and could gain market share against platforms that “aren’t as innovative,” he said.
Shopify’s merchants may themselves expand their customer bases against China-based marketplaces such as Temu and Shein, he added. Both companies said this week that they plan to raise costs in response to the tariffs and changing trade rules.
Shopify has posted strong results in recent quarters, gaining momentum in its large-enterprise segment, in international markets and with its point-of-sale business. In February, the company reported US$8.8-billion in revenue for 2024, up 26 per cent from the year before, and its gross merchandise value was up 24 per cent.
At least 11 other analysts have downgraded their target prices for Shopify since April 2. This includes Morgan Stanley analyst Keith Eric Weiss, who dropped his target price to US$106 on April 15 from US$144, and Connor Murphy from Capital One Securities, who reduced his target to US$105 on April 15 from US$131.
D.A. Davidson & Co. analyst Gil Luria dropped his target price for Shopify to US$115 from US$150 on Monday, noting the company’s high level of exposure to consumer discretionary spending. He lowered his 2025 revenue growth estimate for the company to 16 per cent from 24 per cent. Mr. Luria said he lowered estimates and price targets for all 50 of the companies he covers.
“While we see marketplaces such as Shopify and Amazon as resilient to a consumer slowdown, they are not immune,” Mr. Luria said in an e-mail.
“Since Shopify has a very diverse seller base across many geographies, they are likely to retain many consumers even as those consumers try to mitigate the impact of tariffs.”
In response to the tariffs, Shopify has rolled out local shopping features, tools to display and collect duties during checkout and international importing guides. In a blog post, Shopify said it strongly supports de minimis exemptions, which it says keep costs low and improve small business competitiveness worldwide.
“Reforms should carefully target exploitation by some that exploit the de minimis exemption to flood the market with cheap products. Addressing this abuse is justified, but small businesses can’t become collateral damage,” the company wrote.