Shopify stock forecast 2025: SHOP is not all that overvalued

Shopify’s stock price performed strongly in 2024 as its business trajectory continued during the year. It jumped by over 40% during the year, outperforming the blue-chip Nasdaq 100 and S&P 500 indices. So, is it safe to buy SHOP stock as it hovers at its two-year high?Shopify’s business is doing wellShopify, the biggest player in the e-commerce software industry, is doing well, thanks to robust spending and ecosystem growth. The last financial results showed that its Gross Merchandise Volume (GMV) and revenue experienced double-digit growth. These are notable growth metrics because Shopify is no longer a young company since it was established in 2006.Shopify has expanded its business over the years. In addition to offering simple e-commerce website solutions, it has introduced new solutions that have helped it become a technology juggernaut. It is now a fintech company, with its payment solutions offering GPV of over $43 billion, a 31% annual increase. This growth was mostly driven by its Shop Pay solution, a service that enables users to buy and pay for solutions online.Shopify’s payment solutions also include Shopify PoS, a solution that enables retail partners to accept payments. This service has now expanded to other countries like the UK and Australia. It is an obvious solution for a company that millions of companies use globally. Shopify has also continued adding more companies to its platform. Some of the most notable companies are firms like Reebok, Shoe Carnival, Off-White, Hanes, and Lionsgate. Its future growth will likely be muted since most companies already have a service provider.Shopify made $2.2 billion in revenues in the third quarter, a 26% increase from the same period last year. This growth was driven by a similar performance by its merchant and subscription solutions, which grew by 26% to $1.6 billion and $610 million. The company has also become highly profitable, with its operating income rising to $283 million and free cash flow moving to $421 million.Read more: Shopify stock price forecast: SHOP could jump 30% after earningsSHOP’s growth to continueShopify stock price rose as analysts predict more growth in the coming years. The average revenue growth this quarter is 27% to $2.73 billion. Analysts expect its revenue to grow by 24.45% in the next quarter to $2.32 billion. If these numbers are accurate, it means that its annual revenue this year will grow by 24.5% to $8.79 billion, followed by a 22% annual growth in 2025 to $10.78 billion.These numbers may help justify its perennially high valuation. SHOP’s market cap is over $142 billion, giving it a forward P/E ratio of 83, higher than the sector median of 25.6. Its GAAP P/E ratio of 104 is also higher than most companies, including Nvidia. Shopify’s revenue growth is 24%, while its net income margin is 16, giving it a rule of 40 metric of 40. That is a sign that the company is not all that expensive since it is balancing its growth with its profitability. Shopify stock price analysisSHOP chart by TradingViewThe weekly chart shows that the SHOP share price bottomed at $23 in 2022, soaring to a high of $120 this year. It has moved above the upper side of the ascending channel shown in purple.The stock also moved above the psychological level of $100 and has remained above the 50-week and 100-week moving averages.Meanwhile, oscillators like the Relative Strength Index (RSI) and the MACD have continued rising. Therefore, the stock’s outlook is bullish, with the next point to watch in 2025 being at $175.70, its all-time high that is about 60% above the current level.The post Shopify stock forecast 2025: SHOP is not all that overvalued appeared first on Invezz