Shopify is a good asset-light business with improving margins, but after its surge it trades at a forward P/E of 72, above the 40-55 he sees as sensible, and his DCF fair value of 66 is far below the 177 market price. He is not a buyer at this price and will wait for a better one.

Shopify's stock has seen an upward trend, as the spread of AI proxy has been good news for merchants on its platform. Large language models direct consumers directly to merchant websites, and this has been positive for traffic, transaction volume, and investor sentiment in general.

But does this make Shopify stock a buying opportunity right now? Or has the price already risen so much that it's too late to buy Shopify stock?

For over a decade, Shopify has done an excellent job of improving revenue. Revenue for the past twelve months was $13.3 billion, nearly 13 times the revenue the company recorded in 2017, which was about $1 billion.

It helps entrepreneurs create websites, then deducts transaction fees from those websites, and charges monthly fees from merchants who have websites on its platform. My website, parkevtatevosian.com, is on the Shopify platform.

I pay a monthly fee and a fee for each purchase of my book. Overall, I am happy with the service provided by Shopify. It made it easy for me to run and maintain that website, and I don't have much experience in web design or any of those back-end jobs required to maintain and develop the site.

So I can imagine how important this is for entrepreneurs in general, as Shopify has gained a significant market share in this category. For nearly a decade, the company has also been working to improve its operating profitability and profit margins.

There have been some big changes that you can see on the chart there, with big fluctuations in its profitability and profit margin.

Now, these effects occurred at roughly the same time as the pandemic, so it's easy to think that the pandemic caused their profit margins to increase and then caused them to collapse as the economy reopened.

There certainly was some of that, but at this time as well, Shopify chose to expand its offerings. It chose to expand into the delivery and logistics sector, and made billions of dollars in investments in that category that did not do very well.

The company reversed that decision as quickly as possible once it saw that it was not going in the direction it had hoped for. Therefore, this caused its operating profit margins to fall more dramatically than they would otherwise have during the reopening of the economy.

If we exclude that setback, the company operated on a low-asset business model the whole time, and was working to improve its operating profit margin during that process.

It recently reached 17.82%. This is a relatively good profit margin, and it continues to rise. The same applies to returns on invested capital, which saw a sharp decline when the company decided to invest more capital, billions of dollars, in that expansion in the areas of delivery and logistics.

I remember owning Shopify shares many years ago. One of the reasons I sold my stake in Shopify was that as soon as I heard that the company had started investing billions of dollars in delivery and logistics, I liquidated my position.

One of the reasons I bought Shopify shares back then was that I was attracted, and you know this by now if you follow my channel, to business models that rely on fewer assets.

Shopify had a business model based on fewer assets before deciding to invest and expand into delivery and logistics services. Therefore, I did not like that change in the business model, and accordingly I liquidated my center several years ago.

Since then, the company has reversed those decisions and tried to return to its lower-asset business model, and its return on invested capital has begun to improve, now reaching 14.6%, which is close to or slightly above its weighted average cost of capital.

The recent surge in Shopify's stock price has nearly doubled its market value. Earlier in 2026, the stock was trading at a forward P/E ratio of around 36. It is now trading at a forward P/E ratio of 72, which I feel is a bit high for this company.

Now, I feel that this company deserves a high rating because it has shown significant revenue growth over a long period of time. She works in a sector with strong positive winds, isn't she?

E-commerce still represents a relatively small percentage of total transactions in the United States. This is likely to continue to increase for decades or more, an opportunity estimated at trillions of dollars.

In addition, the business model has become asset-light again as the company demonstrates positive and improving unit economics, so it deserves a high valuation, but 72 seems high to me for this company and its characteristics.

Something between 40 and 55 seems more sensible for a business, all other things being equal. The 72-bit version seems a bit expensive. Similarly, I calculated the fair value of Shopify, and even when looking at it using the discounted cash flow model, I came up with a fair value of 66 while the current market price is 177.

So, the market as a whole is much more bullish on Shopify stock than I am, according to my calculations. Again, I was a former shareholder in the company, so I was optimistic about its prospects, and I like the business model now that they've gotten rid of the execution and logistics activities, but not at this price, is that right?

It is approaching its highest level in 52 weeks. There is a lot of optimism among investors.

The artificial intelligence agent and its proliferation have been very positive, at least in the headlines, for Shopify. So, I will wait to get a better price. So, to answer the question, do I think Shopify stock represents a buying opportunity?

I would like to say no. I would say that the rating seems high. I will wait for a better opportunity to enter.