I've Covered Shopify for 5 Years. Here's Whether the Stock Is Overvalued Right Now.

In my five years covering Shopify (NASDAQ: SHOP), the stock experienced both boom and bust cycles, and I even became an investor as the 2022 bear market and a major misstep (which it later corrected) led to a drop of up to 87%.

The software-as-a-service (SaaS) stock has since recovered most of that loss, and as of now, I'm holding onto considerable stock gains. Nonetheless, while I have no intention of selling any shares, I will not add additional shares under the current conditions. Here's why.

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The state of Shopify

Admittedly, investors have many reasons to be bullish on Shopify. Despite having numerous competitors, it has emerged as the leading sales platform for small businesses and has successfully brought new direct-to-consumer brands under its umbrella. A capital-light business model and an extensive ecosystem for managing e-commerce businesses have also boosted Shopify.

Additionally, large enterprises have increasingly abandoned expensive, custom-built sales sites in favor of Shopify Plus and its Commerce Components solution. To this end, companies such as Mattel and Kraft Heinz have become clients.

More recently, Shopify also partnered with Meta Platforms' Muse to power agentic checkout at all Shopify stores and now gets paid on every checkout. Amid such gains, the stock has trended higher since May.

While its financials are strong, one has to wonder whether they are strong enough to justify its stock price. In the first half of 2026, revenue of almost $6.8 billion increased by 34% year over year.

Moreover, limiting cost and expense growth and net unrealized gains from equity investments led to a net income of $921 million in the first two quarters of 2026, up from $224 million in the same period a year ago.

Nonetheless, analysts expect growth to slow gradually, forecasting 32% annual revenue growth this year and 26% in 2027. Furthermore, at today's stock prices, its price-to-earnings ratio stands at around 100, and a forward P/E of 77 could make it more difficult to profit from this stock if the company experiences another rough patch. Such conditions make it increasingly risky to buy at this time.

Moving forward with Shopify stock

At today's levels, Shopify stock is likely overvalued, and that assessment requires perspective. Shopify is on track to continue growing and leading its industry, and its long-term investment thesis appears intact. Hence, it is not a stock that current shareholders should consider selling.

Investors could question its current valuation amid the prospect of slowing growth. That higher valuation heightens near-term uncertainty, suggesting investors should remain optimistic but tread carefully.

Will Healy has positions in Shopify. The Motley Fool has positions in and recommends Meta Platforms and Shopify. The Motley Fool recommends Kraft Heinz. The Motley Fool has a disclosure policy.