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Shopify (SHOP) shares have seen some volatility recently, catching the attention of investors looking for signs of broader shifts in e-commerce demand. After trending lower over the past month, the stock is drawing more questions about valuation.

See our latest analysis for Shopify.

Shopify’s 1-year total shareholder return clocks in at 34.6%, while the share price has climbed more than 35% year-to-date. Still, after a hot run earlier this year, recent weeks have seen momentum fade a bit with a 7-day share price drop of 4.2% and a 30-day decline of 6.5%. Investors seem to be reassessing growth prospects as the company navigates a dynamic e-commerce landscape.

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The question now is whether Shopify’s recent pullback signals an attractive entry point for long-term investors, or if expectations for future growth are already reflected in the share price. Is there real upside left to capture, or is the market one step ahead?

Shopify’s most-followed narrative sets its fair value at $165.87, about 12% above the recent close of $146.04. This suggests that, even after a recent dip, there could be meaningful upside left if the narrative’s expectations play out as forecasted.

Rapid international expansion, upmarket focus, and financial ecosystem growth are diversifying revenue streams and increasing resilience amid evolving digital commerce trends. Aggressive integration of AI and emerging retail channels is boosting merchant acquisition, efficiency, and margins. This is positioning Shopify as a central digital commerce enabler.

Read the complete narrative.

What’s driving this bullish outlook? The numbers behind this valuation hinge on ambitious growth for both revenue and earnings, plus a profit multiple that puts Shopify in rare company among tech stocks. Want to find out which hidden levers and key assumptions push consensus fair value higher than the market price? Dig deeper to see what underpins this upbeat forecast.

Result: Fair Value of $165.87 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, intensifying competition from e-commerce giants and global regulatory hurdles could put pressure on Shopify’s growth, margins, and long-term outlook.

Find out about the key risks to this Shopify narrative.

While the consensus fair value hints at upside, our comparative multiples approach signals caution. Shopify currently trades at a price-to-earnings ratio of 106.8x, which is well above the US IT industry average of 31.3x, the peer average of 40.7x, and the fair ratio of 51.4x. Such a high premium suggests the stock is priced for exceptional growth, leaving less room for error if expectations fall short. Is this premium justified, or will market sentiment eventually recalibrate?

See what the numbers say about this price — find out in our valuation breakdown.

If you see things differently or want to follow your own instincts, it’s easy to dig into the details yourself and assemble a narrative in minutes. Do it your way

A great starting point for your Shopify research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include SHOP.

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