Analysts continue to raise the goals of their price and the stock price Shopify, Inc. (place)). Its new target price is 20 % higher. This article will explain how to achieve a 3.0 % return by shortening one store one month away at a 4 % strike.
Closed store in 146.82 dollars Friday, September 5, with the maximum market, 191.274 billion dollars. This is more than the previous target price for 137 dollars In the market evaluation 178 billion.
Store – last 3 months – Barsht – as of September 5, 2025
This can be observed in my article on July 13, immediately after the second quarter profit (“Shopify Store is a deal – how to achieve 3.2 % return for one month with a store“).
Since then, Shopify has provided strong Q2 results on August 6. This article will update the previous target price based on its free margins (FCF) and FCF.
Shopify, which competes more and more with Amazon (AMZN) In the seller on the Internet by a third party, the revenues of the second quarter said 31 % to 2.68 billion dollars from 2.045 billion dollars a year ago.
Moreover, the free cash flow (FCF), which remains after all cash expenditures, net working capital changes, and even CAPEX spending, increased by 26.7 % to 422 million dollars.
This means that, as a percentage of revenue, FCF represented 15.75 % of sales (up to 16 % rounds) compared to 15.38 % in the last quarter and 16.3 % last year.
Shopify Q2 FCF and FCF margins page 6 of the Q2 profit version
This means that the company continues to press good amounts of its operations, even as sales continue.
Keep in mind that during the fourth quarter, Shopify tends to make FCF margins much higher during the Christmas season.
For example, another Q4, its FCF margin was 21.73 %, according to the arrow analysis. As a result, the FCF margin for the back of the back was 12 months (TTM) as of Q2 18.14 %, based on stock analysis data. In Q1, the TTM FCF margin was slightly higher at 18.42 %.
As a result, assuming that the next Q4 margin will rise, we can use 18.5 % FCF margin To predict 12 -month -free cash flow (NTM).
Sales will now be for analysts at $ 2025 at a value of $ 11.26 billion (an increase of $ 10.88 billion in my previous article in Barchart). Moreover, 2026 sales expectations are now 13.75 billion dollars, an increase of 13.11 billion dollars.
This means that the upcoming Shopify revenues (NTM) will be at the operating rate 12.505 billion dollars (A 12.0 billion dollars in my previous article).
Therefore, the FCF margin app at 18.5 %:
12.505 billion dollars NTM x 18.5 % sales of FCF = 2.3134 billion dollars FCF NTM
This is 4.2 % higher than my previous estimation of $ 2.22 billion.
We can use FCF estimate to predict its target price.
If we assume that Shopify will eventually pay 100 % FCF for shareholders, and that the market will give the stock a return of 1.0 % FCF, here is its evaluation:
In other words, the store’s store value may be approximately 21 % over the next 12 months:
$ 146.82 x 1.2095 = 177.58 dollars For one stock
The important point is that if the company makes a FCF margin by 18.5 % and gives the market to the stock a rating of 1.0 % of FCF revenues, the stock may rise by 21 % to $ 177.58.
Analysts tend to agree with this. For example, Anachart.com now shows that 34 analysts have a price goal 155.33 dollars.
One of the ways to play this is to set a lower targeted price by shortening from money (OTM). In this way, the investor can provide a good return while waiting for a decrease in the stock.
For example, see the expiration period on October 10, one month (i.e. 33 days until the expiration or DTE). He explains that the PUT option is $ 141.00, which is less than 4 % of the closure of Friday, the center point premium of $ 4.35 per contract.
This means that the short seller of this places can lead to an immediate return from 3.085 % (That is, $ 4.35/141.00 dollars = 0.03085).
The store sets up its expiration on October 10, 2025 – Barsht – as of September 5, 2025
To do this, the investor first secures $ 14,100 with a mediation company in cash or purchase force. This serves as guarantees for the purchase of 100 shares of the store, if they decrease by 4 % to $ 141.00 (per contract of 100 shares).
After that, after entering an order “selling it to open”, put the contract 1 at $ 141.00, the account will immediately get $ 435.00. That is why this play has 3.085 % return (That is, $ 435/14100 dollars).
Note that the investor who does this play has a possible potential purchase point:
$ 131.00- $ 4.35.00 = 136.65 dollars
This is -6.92 % less than the closing price on Friday, so it provides good protection on the negative side.
However, this applies only if the store decreases to $ 141.00 and the account is assigned to buy 100 shares using the already published warranty.
The important point, however, is that the investor has a good rise in this way. On the one hand, they can provide an immediate return of 3.085 %. If this is repeated for three months, the expected return (ER) +9.255 % may be.
This is the same as the detention of shares and the vision of the store shares rise to $ 160.81 over the next three months. Moreover, the investor can also purchase the deep money (ITM) for another external period and use these short plays to help pay the cost of the cost. In this way, they may have some upward trend if the store continues from here.
However, if the store is less than a tie point next month, the investor may end with the loss of unreasonable capital. Investors can study negative risks by going to the Barchart Options Teaching Center.
The bottom line is a store store that looks cheap here. OTM shortening and/or purchasing ITM calls is one way to run.
On the date of publication, Mark R. Hack, CFA parking (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are only for media purposes. This article was originally published on Barchart.com
