Is Shopify Stock a Buy, Sell, or Hold in 2025?

Core Viewpoint - Shopify has emerged as a leading U.S.-based e-commerce stock, significantly rising nearly 300% from its bear market lows in 2022, yet still trading at over a 40% discount from its all-time high in 2021 [1][8] Company Overview - Shopify has successfully created an ecosystem of services for online merchants, with 72% of its revenue in the first nine months of 2024 coming from merchant services [4] - The company faced challenges with the Shopify Fulfillment Network (SFN), which led to significant fixed costs and a return to losses, prompting the sale of SFN to Flexport while retaining the brand [5][6] Financial Performance - In the first nine months of 2024, Shopify generated $6.1 billion in revenue, reflecting a 23$726 million in the first three quarters of 2024, a significant turnaround from a $525 million loss in the same period the previous year [9] Industry Outlook - The e-commerce industry is projected to grow at a compound annual growth rate (CAGR) of 19% through 2030, which is expected to positively impact Shopify's revenue and stock performance [7] Valuation Metrics - Shopify's current P/E ratio stands at 97, with a price-to-sales (P/S) ratio of 16 times revenue, indicating a mixed valuation picture [10] - Historical context shows that Amazon had higher P/E ratios during its growth phase, suggesting Shopify could sustain its earnings multiple, with its sales multiple still below pandemic highs [11] Investment Recommendation - Under current conditions, Shopify stock is recommended as a buy, with a suggestion for new buyers to consider a dollar-cost averaging approach due to rising valuations and slowing growth [13] - The ongoing growth of the e-commerce industry is expected to support Shopify's recovery and potential return to record highs [14]