Shopify Inc. (SHOP) Fair Value & PE Analysis
Software - Application · NASDAQ
Current Price
$165.18
PE Ratio (TTM)
111.7x
Intrinsic Value
$124.85
-32.3% margin of safety
What Is Shopify Inc.'s Fair Value?
As of 2026-10-07, applying a 50.0x earnings multiple to Shopify Inc.'s (SHOP) earnings per share of $1.49 yields a fair value estimate of $124.85 per share, versus a market price of $165.18.
Fair value from earnings multiples is sensitive to the multiple you choose. Across the sensitivity grid the estimate spans $108.72 to $142.8. This is a relative estimate anchored to earnings, not a statement of fact. For a cash flow based view, see the intrinsic value estimate on the DCF page.
How the PE model works · Recalculate in PE mode · SHOP intrinsic value (DCF view)
Is Shopify Inc. (SHOP) Overvalued?
At $165.18, SHOP trades above its PE-based fair value estimate, meaning the market pays a premium over the applied earnings multiple. By this model the stock looks expensive unless earnings grow into the price.
COMPETITIVE MOAT
↑Merchant Ecosystem & Integrations
Shopify's vast app store and extensive integrations create a sticky ecosystem. Merchants rely on this network for specialized tools and services, making it difficult to switch platforms.
↑Brand Recognition & Trust
Shopify is a widely recognized and trusted brand for e-commerce solutions. This brand equity attracts new merchants and fosters loyalty among existing ones.
↑Data Network Effects
As more merchants use Shopify, the platform gathers valuable data on consumer behavior and sales trends. This data can be leveraged to improve services and offer insights, further benefiting merchants.
INVESTMENT RISKS
↓Dependence on Third-Party Integrations
Shopify's ecosystem relies heavily on third-party apps and services. Disruptions or failures in these integrations could negatively impact the merchant experience and Shopify's reputation.
↓Intensifying E-commerce Competition
The e-commerce landscape is highly competitive, with players like Amazon and direct-to-consumer brands constantly innovating. Shopify must continuously adapt to maintain its market position.
↓Regulatory Scrutiny on Data & Privacy
As Shopify handles significant merchant and consumer data, it faces potential regulatory changes regarding data privacy and usage. Compliance costs and restrictions could impact operations.
Base case
SHOP base case PE valuation
Intrinsic Value
$124.85
Margin of safety
-32.3%
Expected annual return
-5.4%
Base case assumptions: 20.0% annual earnings growth, 50x target PE, 10% discount rate, 5 year projection. Data as of 2026-10-07.
This base case uses default assumptions and is not financial advice. The fair value changes significantly when the target PE or earnings growth rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the SHOP PE valuation
Adjust the target PE, earnings growth, and discount rate to see how the fair value and margin of safety for Shopify Inc. respond.
Open PE Calculator for SHOPCompany Overview
Shopify Inc. functions as a premier commerce technology company, providing an extensive platform and associated services to empower businesses worldwide. Its reach extends across Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific region, and Latin America. The company's robust platform equips merchants to effectively display, organize, market, and sell their merchandise through a multitude of sales avenues. These include digital storefronts accessible via web and mobile, traditional brick-and-mortar stores, temporary pop-up locations, integrated social media channels, proprietary mobile applications, embeddable "buy buttons," and established online marketplaces. Beyond sales, the platform streamlines crucial business operations such as product and inventory management, order and payment processing, fulfillment and shipping logistics, attracting new customers and fostering client relationships, product sourcing, analytical reporting, financial administration encompassing cash, payments, and transactions, and facilitating access to working capital. Additionally, Shopify offers supplementary services like the sale of custom website themes and applications, alongside domain name registration. Its merchant-focused solutions also cover payment acceptance, efficient shipping and order fulfillment, and aid in securing necessary operating funds. Founded in 2004 under the initial name Jaded Pixel Technologies Inc., the company officially rebranded to Shopify Inc. in November 2011. Its global headquarters are located in Ottawa, Canada.
Financial Metrics — SHOP PE Stock Valuation Data
PE Ratio (TTM)
111.7x
PEG Ratio
n/m
Earnings Yield
0.90%
ROE (TTM)
15.1%
Revenue/Share (TTM)
$10.24
Debt/Equity
0.01x
Frequently Asked Questions
What is the PE ratio of SHOP?
The trailing twelve-month PE ratio of SHOP reflects how much investors pay per dollar of Shopify Inc.'s earnings. This metric is most useful when compared to Software - Application peers and the company's own historical range.
Is SHOP overvalued based on PE ratio?
SHOP's PE of 111.7x combined with a PEG ratio of -6.32 provides a growth-adjusted perspective. SHOP has negative earnings, so its PE and PEG ratios are not meaningful here and cannot tell you whether the stock is over or undervalued. Keep in mind that PE-based valuation works best for profitable, mature companies — for high-growth or cyclical Software - Application, a DCF analysis may be more appropriate.
How do I value SHOP stock using PE ratio?
To value Shopify Inc. using PE: (1) Compare the current PE (111.7x) against the Software - Application median to assess relative pricing, (2) check the PEG ratio (-6.32) to adjust for growth expectations, (3) review the 5-year PE range to identify where the stock sits historically, and (4) estimate fair value by multiplying a target PE by forward EPS estimates. This relative approach complements DCF's absolute valuation.
What is the PEG ratio of SHOP?
SHOP's PEG ratio is -6.32, calculated by dividing the PE ratio (111.7x) by the expected earnings growth rate. Because SHOP has negative earnings, its PEG ratio is not meaningful and should not be read as a sign of under or overvaluation. Note that PEG accuracy depends on the reliability of growth estimates.
Should I use PE ratio or DCF for SHOP stock valuation?
PE ratio gives a quick relative read — how SHOP is priced versus Software - Application peers. DCF provides an absolute value based on projected free cash flows. For SHOP, with a strong ROE of 15.1%, both methods are worth using — PE for a market-relative check, DCF to stress-test whether fundamentals justify the price. Each method has blind spots: PE ignores capital structure and cash flow quality, while DCF is sensitive to growth and discount rate assumptions.
Learn More
- See SHOP DCF Valuation → — Intrinsic value via Discounted Cash Flow analysis
- PE Methodology — Step-by-step guide to PE ratio stock valuation
- DCF Methodology — Guide to discounted cash flow analysis
- PE Ratio — Understanding the price-to-earnings ratio
- Intrinsic Value — How to evaluate stock fair value
Related PE Valuations
All Technology valuationsP/E and DCF value SHOP with different methods and assumptions, so the two conclusions can differ. Compare the DCF intrinsic value.
Price as of 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.