Shares of Canadian e-commerce giant Shopify (TSX:SHOP)(NASDAQ:SHOP) have been down in the dumps this year, as tech stocks as a whole have been under pressure recently. While Shopify has generated strong growth over the years, investors have become concerned with high valuations in the tech sector.
In Q4 2025, Shopify reported 31% revenue growth and its free cash flow margin was an impressive 19%. It was the 10th straight quarter where its free cash flow margin was in double-digits. For the first quarter of 2026, the company continues to expect its revenue growth to be in the low-30s, as Shopify's business remains resilient.
The biggest problem with Shopify stock these days is valuation. It's one of the most expensive stocks on the TSX, with a market cap of more than $200 billion. It's trading at 13 times revenue and its price-to-earnings multiple is over 120.
It reports earnings early next month, and a strong showing there could give the stock a much-needed boost. Currently, it's trading below its short-term and long-term moving averages, as even technical indicators don't suggest the stock will turn its fortunes around just yet; Shopify desperately needs a catalyst.
But while the stock is down big this year, investors shouldn't conclude that it's cheap. It's still far from its 52-week low of $111.06. And with high revenue and earnings multiples, it may still have more room to fall lower if its earnings numbers fall short of expectations. Taking a wait-and-see approach heading into earnings might be the best option right now, given the question marks surrounding the business today.
