Shopify, Inc. (SHOP) saw a 15.75% quarterly free cash flow margin, beating Q1’s 15.38% due to increased revenue, potentially boosting SHOP stock by +14.6% as analysts adjust forecasts. SHOP is trading at $149.70, with a projected market value of $224 billion compared to its current $194.8 billion cap.

In Q2, Shopify reported $422 million in free cash flow, up +26.7% from last year and +16.3% from Q1. Despite a strong sales increase of +31% Y/Y, the FCF margins were high. FCF was 15.75% of revenue, equivalent to last year’s 16.3% and higher than Q1’s 15.37%.

Shopify is projecting even higher FCF margins for Q3 in the mid to high teens, indicating potential growth. Analysts forecast 2025 sales at $11.25 billion, which, with an 18% FCF margin, would result in an estimated $2.025 billion FCF for 2025.

With a rising FCF margin, Shopify’s valuation may increase. By setting an FCF yield of 1.0% of the market cap, the implied market cap could be $223.2 billion, +14.6% higher than the current cap, indicating a potential stock value increase.

Shorting out-of-the-money puts in nearby expiry periods can be a strategic move. For example, shorting the Aug. 15 $100 put strike at $3.28 per contract yielded an immediate 3.28% return. This high-yield play can be repeated for potential investors in SHOP stock.

Investors can utilize the Sept. 5 put expiry to set a lower buy-in point for SHOP stock. By securing collateral to potentially buy 100 shares at a lower price, investors can generate income and reduce their average cost, providing a way to profitably invest in Shopify.

Read more at Yahoo Finance: Shopify’s Higher FCF Margins Can Push SHOP Stock Higher