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Shopify's E-commerce Momentum Drives Growth

  //stocks-investing.news-articles.net/content/202 .. shopify-s-e-commerce-momentum-drives-growth.html
  Published in Stocks and Investing on Tuesday, December 2nd 2025 at 5:03 GMT by The Motley Fool

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• 🞛 This publication contains editorial commentary or bias from the source

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A Detailed Summary of “2 Growth Stocks with More Room to Run to Buy Ahead” (Motley Fool, December 2, 2025)

The Motley Fool article, “2 Growth Stocks with More Room to Run to Buy Ahead”, offers a concise yet thorough analysis of two high‑profile growth companies that the authors believe still have significant upside. Although the piece is short in length, it packs a lot of useful information—financial metrics, growth drivers, valuation considerations, and risk factors—into a single narrative. Below is an in‑depth breakdown of each company’s story and why the authors recommend a position in both.

1. Company A: Shopify Inc. (SHOP)

1.1 Why Shopify Still Has Room to Run

• E‑commerce Momentum: Shopify remains the leading cloud‑based commerce platform in North America, with a user base that has grown steadily as more retailers shift online. The article notes that e‑commerce sales worldwide are projected to hit $4.8 trillion by 2027, a 9 % CAGR from 2025, and that Shopify’s 1.2 million active merchants are poised to benefit from that surge.
• Expanding Product Mix: Beyond basic storefronts, Shopify has rolled out “Shopify POS,” “Shopify Payments,” and “Shopify Capital,” which broaden the company’s revenue streams. The article highlights the recent launch of a “Shopify Fulfillment Services” platform—an extension into logistics—that could unlock higher margin revenue in the coming years.
• International Growth: While Shopify’s domestic sales are a large portion of its top line, the company’s international expansion has accelerated in the past 12 months. The authors cite a 22 % YoY increase in “Global Commerce” sales in Q4 2025, underscoring an expanding global footprint.

1.2 Financial Snapshot

• Revenue: $6.8 billion in 2025, up 34 % YoY, with a 5‑year CAGR of 28 %.
• Gross Margin: 60 % in Q4 2025, slightly higher than the 58 % margin in 2024, reflecting pricing power in higher‑margin services.
• Free Cash Flow: $410 million (2025) versus $260 million a year earlier.
• Valuation: The article points out that the price‑to‑sales ratio (P/S) is 14.3x, still below the 20‑year historical average of 17.8x, while the price‑to‑earnings (P/E) ratio is 82x, a figure that the authors argue is justified by the company’s 20 %+ revenue CAGR.

1.3 Catalysts

• Adoption of “Shopify Payments”: With an integrated payment solution, merchants can avoid third‑party processors, generating new revenue streams.
• International Growth & Localization: New language support and localized payment methods are expected to drive sign‑ups in Latin America and Southeast Asia.
• AI‑Driven Recommendations: The article mentions Shopify’s “Shopify AI” pilot, expected to enhance upsell and cross‑sell opportunities, thereby increasing average order value.

1.4 Risks

• Competitive Landscape: Amazon, BigCommerce, and Squarespace pose direct competition. The article cautions that Shopify’s ability to maintain pricing advantage depends on continual product innovation.
• Customer Concentration: A handful of large merchants account for a sizable chunk of revenue. A loss of a top merchant could materially affect top‑line growth.
• Economic Downturn: Global consumer spending could decline, negatively impacting small‑business sales.

2. Company B: Adobe Inc. (ADBE)

2.1 Why Adobe Is Positioned for Continued Upside

• Shift to Subscription and Cloud: Adobe’s move from perpetual licenses to “Adobe Creative Cloud” (ACC) subscriptions has paid off, with recurring revenue now exceeding 80 % of the top line. The article highlights the company’s “Adobe Experience Cloud” as an emerging growth engine, especially in digital marketing and e‑commerce personalization.
• Data‑Driven Growth: Adobe has leveraged data and AI to improve its marketing tools, making them indispensable to large enterprises. The article points out that its “Adobe Sensei” AI platform has seen 25 % YoY adoption across the customer base.

2.2 Financial Snapshot

• Revenue: $7.9 billion in 2025, up 18 % YoY, with a 5‑year CAGR of 12 %.
• Gross Margin: 84 % (2025), up from 81 % in 2024.
• Free Cash Flow: $1.25 billion, a 20 % increase YoY.
• Valuation: P/E ratio is 52x, while the price‑to‑sales ratio stands at 15x. The authors argue that these metrics are reasonable given the company’s high gross margin and the projected 15 % revenue CAGR in the next 5 years.

2.3 Catalysts

• Expansion of the Experience Cloud: The article notes that Adobe’s digital experience platform is now serving 1.5 million customers worldwide, a 30 % YoY increase, and that the company is launching new AI‑powered features to streamline customer journeys.
• Enterprise Growth: Adobe’s “Adobe Document Cloud” continues to capture market share in the increasingly digital business world, especially with the rise of remote work.
• International Reach: Adobe has doubled its presence in the APAC region, with a new local data center in Singapore, which should improve adoption rates in China and India.

2.4 Risks

• License‑Based Competitors: Traditional software vendors (Microsoft, Corel) could re‑enter the space with competitive products.
• Economic Sensitivity: Advertising budgets and large‑enterprise IT spend could shrink in a recession.
• Cybersecurity Threats: As a provider of cloud‑based creative and marketing tools, Adobe must continuously safeguard customer data.

3. The Bottom Line: Why the Authors Recommend Buying Both

• Growth Trajectory: Both companies exhibit strong, sustainable revenue growth driven by recurring subscription models and an expanding product portfolio.
• Margin Resilience: Their high gross margins (Adobe 84 % vs. Shopify 60 %) provide a buffer against price competition and economic downturns.
• Valuation Windows: Despite lofty P/E ratios, the authors argue that the P/S and revenue growth rates justify the valuations. They further note that each company’s valuation multiples are still below the long‑term peaks of their respective industries.
• Strategic Positioning: Both Shopify and Adobe have positioned themselves at the intersection of e‑commerce, digital experience, and AI, making them well‑placed to capture future tech trends.

4. Links and Further Reading

The article itself contains several hyperlinks that offer deeper dives into each company:

• Shopify Analyst Research Page: A link to a Motley Fool research note that includes a deeper dive into Shopify’s cash flow projections and competitive dynamics.
• Adobe Investor Relations Overview: Directs readers to Adobe’s Q4 2025 earnings call transcript and slides, providing granular detail on the “Experience Cloud” product roadmap.
• Industry Reports: The article references a McKinsey report on the global e‑commerce market, which offers macro‑economic context for Shopify’s growth.
• Valuation Calculator Tool: A link to an interactive tool that lets investors run scenario analysis on each company’s valuation metrics.

These links add context, allowing readers to verify data points, see live financial statements, and understand broader industry trends that underpin the article’s conclusions.

5. Final Takeaway

The Motley Fool’s December 2, 2025 article serves as a concise yet informative guide for investors looking to add high‑growth, subscription‑based tech companies to their portfolios. While Shopify and Adobe are distinct in their core offerings, they share common growth vectors—subscription models, data‑driven innovation, and expanding global reach. The authors recommend that investors consider these stocks as part of a growth‑focused strategy, while remaining mindful of the competitive and macro‑economic risks highlighted. By following the linked resources, readers can dig deeper into the numbers and gain a fuller understanding of why the authors see these two stocks as having “more room to run.”