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SHOP Trades Higher Than Industry at 13.75X P/S: Is the Stock a Buy?
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Key Takeaways
AI-powered tools and over 150 platform upgrades fuel merchant adoption and revenue growth.
Global reach expands with Shopify Payments in Mexico, Europe and new USDC integrations.
Integration with Roblox opens new digital sales channels targeting younger audiences.
Shopify (SHOP - Free Report) shares are overvalued, as suggested by a Value Score of F. SHOP stock is trading at a significant premium with a forward 12-month Price/Sales (P/S) of 13.75X compared with the Zacks Computer & Technology sector’s 6.69X.
SHOP is trading at a premium against its competitors like Amazon (AMZN - Free Report) , Alibaba (BABA - Free Report) and Etsy (ETSY - Free Report) . Amazon, Alibaba and Etsy shares are currently trading at P/S of 3.28X, 1.98X and 2.22X, respectively.
SHOP Valuation
Image Source: Zacks Investment Research
Shopify shares have gained 19.5% year to date, outperforming the sector’s return of 9.4% and the Zacks Internet Services industry’s decline of 0.2% in the same time frame. Amazon, Etsy and Alibaba have returned 3.1%, 12.7% and 41.8% in the year-to-date period, respectively.
Shopify has been benefiting from robust growth in its merchant base driven by its merchant-friendly tools, including Shop Pay, Shopify Pay Instalments, Sign in with Shop and the Shop App.
SHOP Stock Performance
Image Source: Zacks Investment Research
The stock is currently trading above the 50-day and the 200-day moving averages, indicating a bullish trend
SHOP Stock Trades Above the 50-Day & 200-Day SMAs
Image Source: Zacks Investment Research
Is Shopify an attractive stock for investors at the current valuations? Let’s delve deep to find out.
SHOP Benefits From an Expanding Portfolio
Shopify’s expanding portfolio across payments, AI and automation continues to drive platform adoption. The company’s merchant-facing tool Shop Pay processed $22 billion in Gross Merchandise Value in the first quarter, up 57% year over year, with deeper adoption from brands like Birkenstock, Johnny Was and Kate Spade. The Zacks Consensus Estimate for second-quarter merchant solutions revenues is pegged at $1.88 billion, up 8% sequentially, implying sustained demand for Shopify’s checkout and payment tools.
Shopify launched a number of updates in summer ’25 Edition with more than 150 upgrades, including Horizon and AI Store Builder. The company launched a redesigned POS app that serves, sells, and connects even faster with a checkout. Shopify Payments has now been expanded to more countries, including Mexico and 15 new markets in Europe.
Building on its AI strategy, Shopify rolled out upgrades to its Sidekick assistant and introduced a new AI Store Builder to help merchants automate onboarding and streamline workflows. These enhancements are expected to support subscription growth, with the Zacks Consensus Estimate for second-quarter subscription solutions revenues pegged at $659.92 million.
Further extending its global reach, Shopify partnered with Coinbase and Stripe to enable USDC payments through Shopify Payments. This integration is expected to drive broader participation in cross-border commerce as global GMV scales.
Expanding Partner Ecosystem Aids Shopify’s Momentum
Shopify’s expanding partner network is expected to play a key role in driving the next phase of merchant adoption and global expansion. The ecosystem, which includes TikTok, Roblox, PayPal, Snap, Pinterest, Criteo, IBM, Cognizant (CTSH - Free Report) , Alphabet’s (GOOGL - Free Report) Google Cloud and Adyen, positions Shopify to scale faster across key commerce markets.
Shopify’s partnership with Cognizant and Alphabet is expected to help retailers accelerate modernization efforts through AI-led personalization and cloud-based operations. Aligning Shopify’s commerce infrastructure with Alphabet’s cloud services and Cognizant’s delivery capabilities, the collaboration is likely to support enterprise growth and broader adoption.
The integration with Roblox opens new monetization opportunities by enabling merchants to reach younger, highly engaged audiences in immersive environments. This move is expected to strengthen Shopify’s position in the evolving digital commerce landscape.
SHOP Offers Positive Q2 Guidance
For the second quarter of 2025, Shopify expects revenues to grow in the mid-twenties’ percentage year over year, supported by strength in merchant adoption and platform expansion.
Gross profit is expected to grow at a high-twenties percentage rate, implying continued operating leverage. GAAP operating expense as a percentage of revenue is expected to remain in the range of 39 and 40%. Free cash flow margin is anticipated to land in the mid-teens, reinforcing Shopify’s improving profitability trajectory.
SHOP’s 2025 Earnings Estimates Revisions Are Steady
The Zacks Consensus Estimate for SHOP’s 2025 earnings is currently pegged at $1.40 per share, unchanged over the past 30 days and indicates year-over-year growth of 7.69%.
The consensus mark for SHOP’s 2025 revenues is currently pegged at $10.86 billion, indicating year-over-year growth of 22.28%.
Conclusion
Shopify’s expanding merchant base, strong partner momentum and solid performance across core revenue segments reinforce its long-term growth potential. Continued focus on AI-driven tools, seamless payments and global integrations is expected to support deeper adoption and business scalability.
Image: Bigstock
SHOP Trades Higher Than Industry at 13.75X P/S: Is the Stock a Buy?
Key Takeaways
Shopify (SHOP - Free Report) shares are overvalued, as suggested by a Value Score of F. SHOP stock is trading at a significant premium with a forward 12-month Price/Sales (P/S) of 13.75X compared with the Zacks Computer & Technology sector’s 6.69X.
SHOP is trading at a premium against its competitors like Amazon (AMZN - Free Report) , Alibaba (BABA - Free Report) and Etsy (ETSY - Free Report) . Amazon, Alibaba and Etsy shares are currently trading at P/S of 3.28X, 1.98X and 2.22X, respectively.
SHOP Valuation
Image Source: Zacks Investment Research
Shopify shares have gained 19.5% year to date, outperforming the sector’s return of 9.4% and the Zacks Internet Services industry’s decline of 0.2% in the same time frame. Amazon, Etsy and Alibaba have returned 3.1%, 12.7% and 41.8% in the year-to-date period, respectively.
Shopify has been benefiting from robust growth in its merchant base driven by its merchant-friendly tools, including Shop Pay, Shopify Pay Instalments, Sign in with Shop and the Shop App.
SHOP Stock Performance
Image Source: Zacks Investment Research
The stock is currently trading above the 50-day and the 200-day moving averages, indicating a bullish trend
SHOP Stock Trades Above the 50-Day & 200-Day SMAs
Image Source: Zacks Investment Research
Is Shopify an attractive stock for investors at the current valuations? Let’s delve deep to find out.
SHOP Benefits From an Expanding Portfolio
Shopify’s expanding portfolio across payments, AI and automation continues to drive platform adoption. The company’s merchant-facing tool Shop Pay processed $22 billion in Gross Merchandise Value in the first quarter, up 57% year over year, with deeper adoption from brands like Birkenstock, Johnny Was and Kate Spade. The Zacks Consensus Estimate for second-quarter merchant solutions revenues is pegged at $1.88 billion, up 8% sequentially, implying sustained demand for Shopify’s checkout and payment tools.
Shopify launched a number of updates in summer ’25 Edition with more than 150 upgrades, including Horizon and AI Store Builder. The company launched a redesigned POS app that serves, sells, and connects even faster with a checkout. Shopify Payments has now been expanded to more countries, including Mexico and 15 new markets in Europe.
Building on its AI strategy, Shopify rolled out upgrades to its Sidekick assistant and introduced a new AI Store Builder to help merchants automate onboarding and streamline workflows. These enhancements are expected to support subscription growth, with the Zacks Consensus Estimate for second-quarter subscription solutions revenues pegged at $659.92 million.
Further extending its global reach, Shopify partnered with Coinbase and Stripe to enable USDC payments through Shopify Payments. This integration is expected to drive broader participation in cross-border commerce as global GMV scales.
Expanding Partner Ecosystem Aids Shopify’s Momentum
Shopify’s expanding partner network is expected to play a key role in driving the next phase of merchant adoption and global expansion. The ecosystem, which includes TikTok, Roblox, PayPal, Snap, Pinterest, Criteo, IBM, Cognizant (CTSH - Free Report) , Alphabet’s (GOOGL - Free Report) Google Cloud and Adyen, positions Shopify to scale faster across key commerce markets.
Shopify’s partnership with Cognizant and Alphabet is expected to help retailers accelerate modernization efforts through AI-led personalization and cloud-based operations. Aligning Shopify’s commerce infrastructure with Alphabet’s cloud services and Cognizant’s delivery capabilities, the collaboration is likely to support enterprise growth and broader adoption.
The integration with Roblox opens new monetization opportunities by enabling merchants to reach younger, highly engaged audiences in immersive environments. This move is expected to strengthen Shopify’s position in the evolving digital commerce landscape.
SHOP Offers Positive Q2 Guidance
For the second quarter of 2025, Shopify expects revenues to grow in the mid-twenties’ percentage year over year, supported by strength in merchant adoption and platform expansion.
Gross profit is expected to grow at a high-twenties percentage rate, implying continued operating leverage. GAAP operating expense as a percentage of revenue is expected to remain in the range of 39 and 40%. Free cash flow margin is anticipated to land in the mid-teens, reinforcing Shopify’s improving profitability trajectory.
SHOP’s 2025 Earnings Estimates Revisions Are Steady
The Zacks Consensus Estimate for SHOP’s 2025 earnings is currently pegged at $1.40 per share, unchanged over the past 30 days and indicates year-over-year growth of 7.69%.
Shopify Inc. Price and Consensus
Shopify Inc. price-consensus-chart | Shopify Inc. Quote
The consensus mark for SHOP’s 2025 revenues is currently pegged at $10.86 billion, indicating year-over-year growth of 22.28%.
Conclusion
Shopify’s expanding merchant base, strong partner momentum and solid performance across core revenue segments reinforce its long-term growth potential. Continued focus on AI-driven tools, seamless payments and global integrations is expected to support deeper adoption and business scalability.
Shopify currently carries a Zacks Rank #1 (Strong Buy), which implies that investors should start accumulating the stock right now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.