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Is Shopify overvalued?

Last updated on September 25, 2022 @ 2:02 am

Shopify, Inc. (SHOP) is a leading cloud-based e-commerce platform that enables small businesses and entrepreneurs to create a custom online store.

Shopify is considered to be one of the most overvalued stocks on the market.

Despite its impressive growth, Shopify is trading at a valuation of over 200x trailing earnings. This makes it a very expensive investment, especially when compared to companies such as Amazon Web Services (AWS) and Microsoft (MSFT).

There are a number of reasons why Shopify is overvalued. First, its growth has been very impressive. Since its IPO in 2013, Shopify has grown its revenue by over 800%.

However, its earnings have not kept up with its growth. In 2016, its earnings grew by 36% but its revenue increased by only 27%.

PRO TIP: Shopify is a publicly traded company with a market capitalization of over $30 billion. However, some analysts believe that the company is overvalued and that its stock price could drop in the future.

Second, Shopify is trading at a very high valuation. Its stock is trading at a valuation of over 200x trailing earnings.

This makes it a very expensive investment, especially when compared to companies such as Amazon Web Services (AWS) and Microsoft (MSFT).

Third, Shopify is not profitable.

This means that Shopify is not able to generate significant profits.

Fourth, Shopify faces competition from companies such as Amazon Web Services (AWS) and Microsoft (MSFT). These companies are able to generate significant profits due to their large market share and their ability to generate cash flow.

Overall, Shopify is a very impressive platform, but its high valuation and lack of profitability means that it is not a good investment.

Dale Leydon

Dale Leydon

Sysadmin turned Javascript developer. Owner of 20+ apps graveyard, and a couple of successful ones.