When e-commerce firm Shopify reports first quarter earnings on Thursday, analysts will be looking for management commentary on the Trump administration's halt to "de minimis" tariff exemptions on cheap Chinese goods and the impact on its merchant customers. Shopify stock has retreated 12% in 2025 heading into the earnings report.
Shopify earnings are due before the market. Analysts forecast EPS of 26 cents, up 31%, with revenue growing 25% to $2.334 billion.
With roots in the small business market, Shopify has recently targeted large companies with e-commerce software and services.
The de minimis tariff loophole has allowed Chinese online marketplaces Temu and Shein to ship products valued at less than $800 into the U.S. duty-free.
"We believe the momentum seen in 2024 carried into Q1 and we expect results to beat consensus on growth and margins," said Jefferies analyst Samad Samana in a report. "However, the unknown impact of tariffs and the elimination of the de minimis rule on both merchants and consumers make it difficult to have confidence that recent momentum is sustainable. If the tariff genie were to be put back in the bottle, we believe investor focus would shift back to the core business and the stock would be primed to rally."
He added: "We also believe investors will be looking for detail on Shopify merchants' supply chain exposure to China and the percentage of gross merchandise volume that is processed under the de minimis exemption.
Shopify Stock Rises Amid U.S.-China Talks
On the stock market today, Shopify stock gained more than 1% to 95.73 amid reports U.S.-China trade talks are ongoing.
Canada-based Shopify sets up e-commerce websites for small businesses, and partners with others to handle digital payments and shipping. Also, Shopify offers its own online checkout button for consumers and has used Stripe to process transactions for merchants on its e-commerce platform.
Deutsche Bank analyst Bhavin Shah said in a report: "We expect better Q1 results will be overshadowed by management's view on the impact of tariffs to its merchant base along with Q2 guidance."
He added: "Our analysis suggests that for now Shopify should be able to guide Q2 revenue at least high teens and perhaps 20%-plus, with expense commentary suggesting operating margins mid-to-high teens."
In 2023, the company sold its delivery and logistics business to Flexport.
Further, the e-commerce stock holds a perfect IBD Composite Rating of 94, according to IBD Stock Checkup.
IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
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