If you own or are eyeing Shopify (NasdaqGS:SHOP), this week’s developments just gave you a lot to chew on. Shopify’s Q2 results showed 31% revenue and Gross Merchandise Volume growth year over year. What really has investors talking is the company’s upbeat guidance for Q3 and its swift expansion into Europe. Momentum increased further with the news that BARK Inc., a major DTC brand managing millions of recurring orders, completed its migration to Shopify’s eCommerce platform. This highlights the company’s ability to land and integrate complex, high-value clients.
Shopify’s stock has surged nearly 90% over the past year and about 32% year-to-date, making it one of the market's stronger comeback stories. Volatility remains part of the deal. Shares jumped over 3% following hints of an upcoming interest rate cut from the Federal Reserve. The real drivers, however, continue to be Shopify's international push and AI-driven product enhancements that keep attracting big merchants. There is clearly demand for scalable solutions, which puts Shopify in a strong position, even as competition and macro risks remain.
With so much good news and a stock price that has rebounded sharply, the real question is whether Shopify is still undervalued or if the market has already incorporated its next phase of growth.
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Most Popular Narrative: 10.9% Undervalued
According to the community narrative, Shopify is currently valued below its estimated fair price based on projected future earnings, margin assumptions, and a growth-focused strategy.
"Shopify is expanding rapidly in international markets, with 42% year-over-year GMV growth internationally (especially in Europe, but also in Asia Pacific). As digital commerce adoption increases globally, this drives a larger addressable market and is expected to support outperformance in revenue growth and GMV. The company is aggressively integrating AI-driven capabilities (such as Sidekick, the AI store builder, and conversational commerce integrations with large language models). These tools enable merchants to launch, manage, and scale stores with less friction and greater efficiency. This is likely to accelerate merchant acquisition, improve retention, and drive higher margins through automation and new high-value features."
Is Shopify’s next chapter about to break the mold? The narrative’s predicted fair value relies on ambitious sales expansion, dramatic international gains, and margin resilience. These are important ingredients behind this eye-catching price target. What does this combination mean for growth, and how bold are those financial forecasts? Discover the critical numbers fueling this undervalued call.
However, intensifying competition and increasing regulatory challenges could quickly dampen Shopify’s growth momentum and pose difficulties for even the most optimistic outlooks.
Looking from a different angle, our DCF model paints a less optimistic picture. This suggests Shopify may actually be trading above what its future cash flows would justify. Could the market be overlooking hidden risks?
If you're not convinced by the perspectives covered here or want to dig into the figures yourself, you can shape your own narrative in just a few minutes. Simply do it your way.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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