Shopify (SHOP 1.08%) is about to answer a few burning questions for investors. The e-commerce platform specialist's stock has jumped in 2023 on hopes that last year's sell-off was overdone. The company has a huge potential runway ahead, after all, as it builds on its significant presence facilitating both online and offline commerce.

This bullish outlook will be tested when Shopify announces its first-quarter earnings results in a few days while updating its forecast for the 2023 year. Against that backdrop, let's look at why the stock might have more room to run from here.

Great expectations

Most Wall Street pros are looking for sales to rise by about 19% in the Q1 earnings report slated for May 4. This result would mark just a modest slowdown compared to the 26% spike that Shopify achieved in late 2022. Executives in mid-February cited economic pressures on the business that were largely offset by its widening portfolio of seller services. "Our platform and solutions enable merchants to stay ahead of the dynamically changing commerce landscape," Shopify President Harley Finkelstein said in a press release .

Investors are hoping to see more progress on this score for Q1. Shopify needs to keep growing its base of sellers while also deepening its relationship with these customers. Its international selling service, payments processing, and capital funding programs all represent encouraging moves aimed at making the platform an indispensable one for many merchants.

Seeking profitability

Growth won't be enough on its own to sustain Shopify's stock price rally. Wall Street is also looking for signs that the business is moving toward sustainable profitability.

SHOP Operating Margin (TTM) Chart

SHOP Operating Margin (TTM) data by YCharts

The early May report might show major progress in this area thanks to cost cuts plus Shopify's recent fee hike. The higher prices are a test of customer loyalty and the platform's stickiness with merchants. If seller growth continued into early 2023, then that's a great sign for long-term profit trends. Rising fees will ideally offset the profit pressure from its expanding payments processing business, too. Executives cited that shift as a key reason why gross profit margin slipped to 49% of sales last year from 54% a year earlier.

Looking ahead

Executives in February had projected that gross margin will hold at about that 49% rate through 2023, but that forecast could change in the Q1 update. Shopify will also take a fresh stab at estimating revenue growth, which is currently projected to slow to the high-teens percentage range this year from 26% in 2022.

Looking further out, the main reason to like this stock is the growth that Shopify can achieve over the long term. There's a good chance the company can build on its current 10% market share in the U.S. e-commerce industry, for example, even as it works to build a more complete portfolio of services to handle everything a merchant needs to run its business.

Yet investors are still taking on some big risks in buying the stock now, given fundamental questions about its profitability. Its earnings rebound would be delayed by a recession, too. These risks are elevated by the fact that the stock is now valued at over 10 times annual sales. That premium valuation means investors might want to keep this stock on their watch lists for now as they wait for more clarity about Shopify's long-term profit potential.