Shopify Trades 14% Below 52-Week High: Buy, Sell or Hold the Shares?

Shopify SHOP shares closed at $157.51 on Wednesday, which was 14% lower than the 52-week high of $182.19 it hit on Oct. 29. SHOP shares have jumped 52.2% in a year, outperforming the broader Zacks Computer and Technology sector’s appreciation of 28.5%. So, does the pullback offer a buying opportunity for investors? Let’s find out.

SHOP Shares Are Overvalued

Shopify is significantly overvalued, as suggested by a Value Score of F. In terms of the 12-month price/sales (P/S), SHOP is currently trading at 14.56X, compared with the broader sector’s 7.46X.

Price/Sales Ratio (F12M)

Shopify shares are pricey compared with Amazon AMZN, Wix.com WIX and Commerce.com CMRC. Shares of Amazon, Wix.com and Commerce.com are trading at P/S multiples of 3.16, 2.16 and 0.90, respectively. In terms of share price performance, Shopify has outperformed Amazon, Wix.com and Commerce.com in the trailing 12-month period. While Amazon shares returned 6%, Wix.com and Commerce.com dropped 35.3% and 63.6%, respectively.

SHOP Stock’s Performance

However, Shopify’s near-term performance is expected to suffer from modest earnings growth given gross margin headwind, a challenging macroeconomic condition and stiff competition. The company’s gross margin is suffering from a higher mix of low-margin Merchant Solutions revenues and the negative impact of rapid Payments penetration.

SHOP’s 2025 & 2026 Earnings Estimates Revisions Are Steady

The Zacks Consensus Estimate for SHOP’s 2025 earnings is currently pegged at $1.45 per share, unchanged over the past 30 days and indicating year-over-year growth of 11.54%. The consensus mark for SHOP’s 2025 revenues is currently pegged at $11.46 billion, implying a year-over-year rally of 29%.
 

Shopify Inc. Price and Consensus

Shopify Inc. price-consensus-chart | Shopify Inc. Quote

The Zacks Consensus Estimate for SHOP’s 2026 earnings is currently pegged at $1.77 per share, unchanged over the past 30 days and indicating year-over-year growth of 21.7%. The consensus mark for SHOP’s 2026 revenues is currently pegged at $13.97 billion, implying a year-over-year rally of 22%.

AI Infusion to Aid Shopify’s 2026 Prospects

Shopify hosts a data trove thanks to an expanding merchant base and a growing number of transactions. This whopping amount of data is helping Shopify offer better shopping experiences to merchants and eventually their customers. The company is leveraging agentic commerce to boost shopper experience, beginning with product discovery to conversation and finally checkout through tools like Catalog (product discovery), Universal Cart and Checkout Kit. 

Shopify’s expanding partner base is noteworthy in this regard. The company’s partnership with Perplexity is helping it gain a footprint in conversational shopping, while partners like OpenAI (ChatGPT) and Microsoft (CoPilot) are helping to smooth out in-chat shopping flows. Shopify’s AI-powered post-purchase tools are helping merchants build long-term, durable relationships with shoppers. Growing adoption of Sidekick, Shopify’s on-platform intelligent assistant, reflects the company’s expanding footprint among AI-first merchants.

Expanding International Footprint Aids SHOP’s Prospects

Shopify’s growing international footprint is a key catalyst. International GMV grew 41% year over year in the third quarter of 2025, with Europe leading the charge (21% of revenues). Shopify Capital is now available in Germany, the Netherlands, Ireland and Spain, providing more merchants with access to growth funding. In the third quarter of 2025, Shopify Payments penetration gains were more than 50% higher than the gains in the year-ago quarter in Europe. 

Shopify also launched Shopify Payments for POS to three additional countries and rolled out Tap to Pay in seven more countries in the third quarter of 2025. Shop App also expanded Track with Shop and Translations in six new markets in the third quarter of 2025, making it a top destination for local buyers globally.

Shopify’s expanding partner base is expected to further boost its international footprint. In the third quarter of 2025, the company partnered with Amazon, Big Blue, DHL Fulfillment Network, Go Bolt and Maple to give merchants more fulfillment flexibility. The deals with Australia Post, Royal Mail and DHL Express Canada now offer more carrier diversity, while the launch of DHL Express DDP, DHL e-commerce DDP and the enablement of Canada Post DDP help merchants easily collect duties at checkout.

Conclusion

Shopify is expected to suffer from gross margin headwinds and stiff competition in the near term. However, AI infusion and expanding international footprint bode well for the company’s long-term prospects. So, investors already holding the stock should remain put.

Shopify currently has a Zacks Rank #3 (Hold), which implies that prospective investors should wait for a more favorable point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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