SHOPIFY INC. (SHOP) stock intrinsic value fair value estimate & owner earnings analysis

Shopify sells the software that lets merchants run online and in-person stores, and earns money in two ways: subscription fees (24% of 2025 revenue of $11.56 billion) and merchant solutions (76%), chiefly Shopify Payments, which processed $248.1 billion of merchant sales in 2025 at a 65.6% penetration rate (61.9% a year earlier). Revenue grew 30% in 2025 and 26% in 2024, and the first half of 2026 shows revenue of $6.75 billion versus $5.04 billion a year earlier. How we measured earnings. We start from operating cash flow, remove the swings in receivables, merchant cash advances, payables and deferred revenue, and then deduct stock-based compensation ($449 million in 2025) as a real cost. We also deduct the provision for transaction and loan losses ($230 million in 2025): Shopify's loans are funded outside operating cash flow, so their losses would otherwise never be charged. Equipment spending is tiny (about $26 million) and almost all of it is treated as upkeep. On this basis owner earnings were about $1.45 billion in 2025 ($1.11 per share) and $1.19 billion in 2024 ($0.92 per share). The two earlier years, 2022 and 2023, are excluded from the anchor: they were distorted by the logistics acquisitions and their sale, the May 2023 workforce reduction and $164 million of accelerated share compensation. We therefore anchor on the median of 2024 and 2025, about $1.01 per share. Interest earned on Shopify's large cash and securities holdings is inside operating cash flow and is not added again. The convertible notes were repaid in 2025, so no debt adjustment applies. Growth check. Owner earnings per share rose about 22% in 2025. Our base case assumes 15% in year 1, below that actual rate, then tapers by one point a year to 6% in year 10. That is well under the 20-plus percent revenue growth the company has delivered, and we credit only a tapering share of it: the record of steadily adding merchants and moving them to higher-priced plans (subscription fees rose $360 million in 2025) is multi-year and self-funded. Continued market expansion, new products and margin gains are not counted. After year 10 we hold earnings flat for 15 more years and then stop, because we can name no evidence beyond that. Cases. Base, about $28.50 per share: the path above. Bear, about $10.40: payments already reach 65.6% of sales and adoption among eligible merchants fell in 2025 (North America 91% to 88%), and merchant solutions is three quarters of revenue, so we assume earnings stay near the 2024 level of $0.90 per share, grow only 8%, 6%, 4%, 2% and then stop, hold flat until year 15, and end. Bull, about $37.30: earnings begin at the 2025 level ($1.11) and grow 20%, 18%, 16%, 14%, 12%, 10%, 8%, 6%, 5%, 4% as recent revenue and cash-flow strength (first-half 2026 operating cash flow of $1.14 billion versus $0.80 billion) proves durable, then hold flat for 20 years. Margin-of-safety price. The margin-of-safety price is about $15, roughly half the base value and 1.5 times the bear value, because owner earnings history is short and volatile, share compensation is heavy, and earnings depend on payments. What could prove this wrong. Faster durable growth than we credit would make it too low; a lower payments take rate or higher loan losses would make it too high. Not reconciled: prior-year owner earnings before 2022 were not available in the filings we used, so the anchor rests on two clean years.