Shopify Stock Just Got a $3 Billion Buyback Boost. Here’s the Bigger Story

Key Stats for SHOP Stock

• Past week’s performance: 7.1%
• 52-week range: $94 to $182
• Valuation model target price: $176
• Implied upside: 42.5% over 2.5 years

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Shopify’s Growth Engine Keeps Firing

Shopify (SHOP) climbed about 7.1% this week, extending a strong run built on accelerating merchant activity. The company recently boosted its share buyback authorization by $3 billion, bringing the total to $5 billion, a signal that management sees the stock as undervalued. That move built on momentum from an already strong first quarter.

Shopify posted first-quarter gross merchandise volume of $101 billion, up 35% year over year, marking the second straight quarter above that threshold. Revenue rose 34% to $3.2 billion, and free cash flow reached $476 million for a 15% margin, extending a streak of four consecutive quarters with 30% or higher growth in both revenue and GMV.

President Harley Finkelstein told analysts, “commerce is moving at lightning speed right now, and so is Shopify.” He pointed to enterprise adoption as a key driver, noting the number of merchants doing over $100 million in GMV has nearly doubled in two years.

Shopify shares initially dipped after the print because guidance came in only modestly ahead of expectations, but the buyback expansion in June helped reset sentiment. If SHOP stock keeps compounding GMV at this pace, the market’s willingness to pay a premium multiple should hold.

See analysts’ growth forecasts and price targets for SHOP (It’s free) >>>

Is SHOP Stock Undervalued?

Under valuation model assumptions realized through 12/31/28, the stock is modeled using:

• Revenue growth (CAGR): 20.0%
• Operating margins: 17.1%
• Exit P/E multiple: 64.9x

Based on these inputs, the model estimates a target price of $176, implying 42.5% total upside and a 15.3% annualized return over the next 2.5 years.

Shopify’s valuation looks steep on the surface, trading near 65 times forward earnings on the model’s assumptions, though some market estimates put its current multiple closer to 90 times. That multiple only makes sense if growth stays elevated, and so far the company keeps delivering on that front. Revenue growth near 20% in the model, well below the current 34% pace, still supports a healthy target price.

Margins are the other piece of the puzzle. Operating margins near 17% remain thin compared to mature software companies, but they have expanded steadily as Shopify scales its payments and enterprise businesses. Shop Pay volume grew 59% last quarter, and that kind of penetration typically drives higher-margin, recurring revenue over time.

An annualized return above 15% under these assumptions suggests the stock still has room to run, even after its recent gains, as long as merchant growth does not meaningfully slow.

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Shopify Versus E-Commerce Platforms

Shopify trades at roughly 65 times forward earnings based on the valuation model’s exit multiple, and some market estimates put its current multiple closer to 90 times, reflecting how much growth investors are pricing in.

Amazon (AMZN), by comparison, trades near 31 times trailing earnings after posting 16.6% revenue growth and EPS of $2.78 last quarter, nearly triple analyst estimates. Even with that beat, Amazon’s growth rate is roughly half of Shopify’s 34%, which is exactly why the market still awards Shopify the richer multiple.

BigCommerce (CMRC) sits at the opposite end. It posted just 5.4% revenue growth last quarter, its first GAAP profitable period as a public company, and trades at a fraction of Shopify’s valuation as a result. The company has also seen its active store count shrink 8% year over year as it shifts toward larger enterprise accounts, a strategy shift that has not yet translated into the kind of growth Shopify delivers.

That spread between 5% and 34% revenue growth explains almost the entire valuation gap across these three names. Shopify’s premium only holds up if it keeps compounding GMV near its current pace, but so far each quarter has reinforced rather than undermined that growth story.

See why Shopify’s $2B buyback points to a $194 target >>>

What’s Driving SHOP Stock Going Forward?

Shopify’s next earnings report arrives on August 5, and management has guided for high-20s percent revenue growth in the second quarter alongside continued mid-teens free cash flow margins. Investors will watch closely whether that guidance holds given the strength shown so far this year.

Agentic commerce is becoming a bigger part of the story. Shopify has said merchants can already sell directly to ChatGPT users through agentic storefronts, positioning the company at the center of how AI-driven shopping evolves. That optionality could become a meaningful growth driver if adoption accelerates over the next year.

Fintech expansion is another catalyst worth tracking. Shopify has been seeking licenses to push deeper into financial services, building on the momentum of Shop Pay and its existing merchant lending products. Because Shopify already touches so much commerce volume, even modest fintech penetration could meaningfully expand its addressable market.

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Should You Invest in Shopify?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up SHOP, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

You can build a free watchlist to track SHOP alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!