Shopify Stock Popped 22% After Earnings. Is it Too Late to Buy?

Key Points

• Shopify's site and ecosystem continue to attract more merchants.

• Gross merchandise volumes and revenue are growing at a rapid pace.

• Whether Shopify looks "expensive" may depend on the metric one chooses.

• 10 stocks we like better than Shopify ›

Shopify (NASDAQ: SHOP) is on fire. After its Aug. 6 earnings report for the second quarter of 2025, the stock popped 22%. The stock has retreated since then, but it is still up by more than 80% over the last year.

Although such gains are impressive, they could also lead to concerns over the stock and its valuation. Investors need to take a closer look at Shopify stock to see whether now is a good time to add shares, or whether they should stand pat or possibly sell.

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The state of Shopify

Shopify has become the leading company among e-commerce platform providers. It first stood out by offering a no-code, highly customizable site that non-programmers could set up and launch. The company enhanced this ease of use by also emphasizing speed, making it more user-friendly and less likely that e-retailers would lose sales due to a slow website.

Moreover, it also built an ecosystem that helped online merchants with ancillary tasks such as payments, email marketing, and, more recently, AI tools such as Sidekick and Shopify Magic. Since sales platforms are not particularly unique, the ecosystem gives Shopify a competitive advantage that its clients will not find on most other platforms.

These capabilities helped make Shopify stock a pandemic darling, and it had a peak closing price of more than $169 per share in 2021. Unfortunately, the stock sold off in the 2022 bear market, and this was exacerbated by an attempt to build a Shopify Fulfillment Network (SFN). Consequently, it lost as much as 87% of its value as it returned to losses.

The company later decided that building such a network was too costly and a poor fit for what is otherwise a software company. After selling the SFN to Flexport in 2023, profitability soon returned, and the stock began moving higher.

That bull market has largely continued. Today, the stock is only about 20% below its all-time closing high.

How Shopify fares financially

Thanks to that growth, Shopify generated nearly $163 billion in gross merchandise volume in the first half of 2025, rising 27% yearly. That generated just over $5.0 billion in revenue in the first two quarters of 2025, a 29% yearly surge.

Keeping expense growth in check led to a 51% rise in operating income. Unfortunately, unrealized losses weighed on its performance in Q1. Thus, its net income was just $224 million in the first half of 2025, though that was an improvement over the $102 million loss in the same year-ago period.

Additionally, the company forecasts revenue growth of a mid-to-high-20s percentage rate, which should bode well for its net income. That helped stoke the aforementioned 22% pop in the stock following earnings.

Still, investors should note that the stock has become expensive by some measures. The stock's P/E ratio is around 70, and measuring the valuation by the price-to-sales (P/S) ratio of 18 confirms this is a pricey stock. Still, such valuations are not unheard of for tech-oriented growth stocks, indicating Shopify could still attract buyers.

Is it too late to buy Shopify stock?

Considering the company's growth in valuation, it is probably not "too late" to buy the stock, though it could face struggles in the near term.

Indeed, Shopify has stood out over most of its competition with its fast, easy-to-use sales site and a support ecosystem increasingly geared toward AI. That is driving considerable increases in gross merchandise value and, by extension, revenue levels.

That has taken the stock higher, along with its valuation. Admittedly, with the P/E ratio at 70 and the 18 P/S ratio, it could add to the risk of a near-term pullback. Still, such valuations have not necessarily deterred growth investors, making any longer-term pullback less likely.

Thus, interested investors can profit by adding shares now, though they should probably proceed carefully.

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Will Healy has positions in Shopify. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.